On Wednesday (6 June 2024), Nvidia’s market capitalization crossed $3 trillion claiming as the second largest publicly traded company…
How Nvidia Became A Very Successful Company? Top 10 Lessons
On Wednesday (6 June 2024), Nvidia’s market capitalization crossed $3 trillion claiming as the second largest publicly traded company. Nvidia surpassed Apple and Microsoft in market capitalisation for the first time in history. Talking about the shares of Nvidia in the past 12 months, they have climbed nearly 200%. What makes Nvidia so special and why are Nvidia’s share prices rising and what is so special about the company?
What were the initial steps taken by Husen Jensen, management and core team of Nvidia which placed Nvidia as one of the most valuable companies in the world.
Let us figure it out by first looking at the company’s history.
History of Nvidia
Nvidia was born in the heart of Silicon Valley, California. Jensen Huang, Chris Malachowsky & Chris Hsieh founded the company with a vision of creating high performance graphics processing units (GPUs) especially for personal computers.
In the early 2oth century, the graphics technology was in its infancy and it was the time when Nvidia’s founder set out to create 3D graphics for the multimedia & gaming industry.
In 1995, Nvidia released its first product “The Nvidia NV1 manufactured by SGS-Thomson Microelectronics. Although it was not a commercial success for Nvidia, it laid the company’s foundation. The real breakthrough for Nvidia happened when it launched the world’s first GPU in 1999- GeForce 256. It introduced hardware acceleration for 3D graphics to gaming and multimedia companies at that time.
Now let us discuss how Nvidia became one of the most successful companies in the tech sector ?
What makes NVIDIA so special?
Nvidia Presence in Gaming Indusry
In the early 2000, Nvidia’s GPUs started to dominate the gaming industry. The GeForce 2 which was released in 2000 enhanced the graphics performance by bringing the cinematic effects to pc games. By now gamers around the world were recognizing Nvidia as the perfect choice for smooth gaming experiences.
In 2006, Nvidia released the GeForce 8800 GTX which can support Microsoft’s DirectX 10 and set a new standard for graphics quality. This launch marked the beginning of a series of GeForce GPUs that pushed the boundaries of what was possible in gaming. Nvidia’s commitment to develop top level graphics technology extended beyond PC gaming.
Nvidia in AI and Deep Learning (2010s)
By 2010, Nvidia was already well known for gaming GPUs, the company’s biggest breakthroughs came in the field of artificial intelligence (AI) & deep learning. In 2012, Nvidia introduced the Tesla K20 GPU which was specifically designed for high performance computing tasks. This advanced GPU was responsible for the development of AI & deep learning applications which require high computing power.
Nvidia’s CUDA (Compute Unified Device Architecture) is a parallel computing platform which became the backbone for AI research & development. Researchers and scientists relied on the power of Nvidia GPUs for fast complex computations which lead to many advancements in image recognition, natural language processing & vehicle automation.
In 2016, Nvidia introduced the Pascal architecture featuring Tesla P100 GPU which set new records in the AI industry. The company also introduced the DGX-1, an AI supercomputer in a ‘box’ designed especially to help in deep learning projects.
Nvidia In Ray Tracing & Real-Time Graphics (2018-Present)
In 2018, Nvidia introduced ray tracing technology with the GeForce RTX series GPUs which strengthen the real time graphics rendering.
Nvidia showcased real-time ray tracing technology using their DGX station supercomputer and the DXR API. Further they also introduced DLSS which uses AI to improve gaming performance.
Nvidia Worked Closely With Game Developers
Nvidia worked with game developers to include ray tracing in popular games to make it accessible worldwide. They also introduced DLSS (Deep Learning Super Sampling) technology which makes low resolution images look better in real time through the use of artificial intelligence providing smoother gameplay without losing quality.
In 2020, Nvidia bought ARM, a company known for its energy-efficient technology used in mobile devices and IoT devices. This acquisition helped Nvidia expand its influence in the tech industry.
What is the Business Model of Nvidia ?
Nvidia’s business model is built on designing & selling graphical processing units (GPU’s) & other related technological solutions which are as follows-
One of Nvidia’s primary sources of revenue comes from the sale of its graphics processing units (GPUs). These powerful chips are used in a wide range of applications including gaming, professional visualization, data centers and automotive technology.
As demand for high-performance GPUs continues to grow, Nvidia has been able to capitalize on this trend and generate significant revenue from the sale of these products. Additionally, Nvidia’s GPUs are also used in the mining of cryptocurrencies, which has provided another lucrative revenue stream for the company.
Here are some sources from which Nvidia makes money:
- Nvidia’s GPU sales
- AI & Machine Learning
- Data Centered Solutions
- Software & Platforms
- Automotive Technology
- Partnership and Collaborations
You can also read our article which covers industries in which Nvidia chips are used, you will have a complete understanding of Industries working as a revenue source for Nvidia.
What is the Future of Nvidia?
Nvidia solidified partnerships with SEGA games, HP, and Dell. SEGA produced popular games, which drove people to buy HP and Dell computers equipped with Nvidia graphics cards. This arrangement benefited all parties and boosted Nvidia’s profits.
Nvidia strategically also partnered with top companies like Volkswagen, Tesla, Google, Amazon and Microsoft. Nvidia’s valuation far exceeds its revenue due to its important role in the gaming industry.
The future of Nvidia looks promising as the company strengthens its strategic partnerships with major players and aligns itself with major market players.
Top 7 Business Lessons From Nvidia
Forward Thinking Perspective - Business Lesson From Nvidia
Companies like Google, Apple, Tata or Reliance do not just consider the present; these corporate giants take a long term view of the future (even the picture of the next decade).
So, if you are operating a business then you should ask yourself, your core team and your management three fundamental questions:
- Will my business still be relevant in five years?
- Can my business scale up?
- What potential threats could endanger my business?
Currently, if you do not have answers to these questions then sit with your management and core teams to map your company’s future.
2. Sell Solutions Not Products - Business Lesson From Nvidia
The second lesson from Nvidia is to ‘sell solutions then products.’
Have you ever thought about the reason behind the buying decisions?
Customer problems, pain points, emotional influence, urgency and trust are the top factors which drive the decision of a person to buy a product or a service.
Customers want to invest in solutions that solve their needs and problems. In the context of Nvidia graphics cards, just listing down the specifications of technical products have not led them to heavy sales. You can also apply this lesson in your business by identifying:
- What are the pain points of your target audience?
- Who has the decision making authority of your product ( to power to take decisions of your product (grocery shopping decisions may be more influenced by parents than teenagers)?
- Which factors influence the buying decision of your product the most (e.g., price, quality, or location)?
If you invest time in this, you will increase chances of leading your industry or even creating a market monopoly.
3. Hunger for Innovation- Top Business Lesson From Nvidia
The third and most critical lesson from Nvidia is to place innovation as top priority. In 1997, over 70 companies were producing graphics cards but by 2000, most of them were out of the industry due to lack of innovation.
In this meantime, Nvidia emerged as one of the leading survivors and innovation was the main reason behind its survival. Their innovation can be seen as top players in the market openAi, GROK and xAI by elon musk, Microsoft’s ORCA AI are based on the Nvidia Graphics which led Nvidia to dominate the graphics unit market with an 83% market share.
Remember, every business possesses a hidden secret that can set it apart from competitors.
4. Hitting Market At the Right Time - Lesson from Nvidia
Time is everything in business and Nvidia is the perfect example of how entering the market at the right moment can change the trajectory of the company. When you hear the word ‘Nvidia,’ you likely think of graphics cards but the company is also an epitome of understanding market needs and trends. A prime example of Nvidia’s market timing was the entry in the 2000s when the gaming industry was on the side of explosive growth.
Nvidia developed its GeForce GPUs with exceptional graphics performance at a time when gaming was becoming more demanding, with higher graphical processing needs. Nvidia’s GPUs were perfectly positioned to meet the requirements of both gamers and developers. Nvidia’s timing also aligned with the rise of 3D gaming, and later, it leveraged its technology for AI and data processing. Once again, Nvidia claimed the crown, this time in the machine learning field.
The lesson is clear- success comes when you align your product or services with market timing and demand.
5. Leadership- Building Block of Nvidia Success
We have talked about market timing, innovation, forward thinking, focusing on solutions rather than procuts but now let us discuss the vision and mission based on which all those things are based, which is leadership style.
Conclusion
You can learn a lot from Nvidia’s leadership style, management, investment strategies and marketing strategies. While we have covered how Nvidia became so successful and lessons from it are general but if you are really interested in learning more, you can search for articles on Google, watch YouTube videos or wait a little while for our upcoming blogs on Bizkis.
If you find this interesting, you can follow us on LinkedIn, where we also publish different and unique content. Don’t worry—it’s about finance, business startups, and marketing, you will love it!
FAQs
Why did NVIDIA become so successful?
NVIDIA became so successful because of its innovation in GPUs manufacturing and distribution, top level decisions, strategic partnerships with major companies and its alignment in the AI industry.
What makes NVIDIA so special?
NVIDIA’s is a unique combination of advanced technology, innovation and strong presence in the gaming and AI industry. Nvidia latest and advanced GPUs are the foundation of real time graphics, deep learning and automated vehicles.
What are the success factors of NVIDIA?
Forward-thinking leadership team, a focus on solving customer problems with innovative solutions and timely market entry that aligns with industry trends.
Why is NVIDIA so highly valued?
NVIDIA’s valuation exceeds its revenue due to its main role in the gaming and AI sectors. The company’s growth potential in emerging technologies further enhances its market value.
How is NVIDIA growing so fast?
NVIDIA is experiencing rapid growth because of its strategic partnerships, expanding into new markets like AI and automotive technology and continuous innovation in GPU technology.
What will NVIDIA be in 5 years?
In five years, NVIDIA is likely to have a solid foundation and position itself as a leader in AI technology and gaming graphics and also might expand in cloud computing.
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