There is no secret that mainstream personal computers have been approaching “good enough” performance and quality barrier for a long time and for many consumers contemporary performance levels as well as feature-sets are not needed, at least for every day computing. Looks like the head of Nvidia Corp. agrees with that and expects that cheap netbooks will eventually eat market share of mainstream mobile PCs.

“During difficult times many people who still need to have a PC or would like to have a PC, now have a very inexpensive version to buy. So, the demand for Intel Atom PCs and these netbooks has really surged. I think what is going to happen is that the low-end part of the marketplace is going to cannibalize the mid-range part of the market,” said Jen-Hsun Huang, chief executive officer and president of Nvidia in the most recent quarterly conference call with financial analysts.

Nvidia itself has never concentrated on low-end products: the company has always tried to sell its graphics processing units (GPUs) and core-logic sets at premium price points so to get higher profit margins. But the tough economic times have also affected Nvidia: the company’s most recent quarter results were expected, but were a disappointment for many.

For the fourth quarter of fiscal 2009 (ended on the 25^th of January), revenue was $481.1 million compared to $1.2 billion for the fourth quarter of fiscal 2008, a decrease of 60%. For the twelve months ended January 25, 2009, revenue was $3.4 billion compared to $4.1 billion for the twelve months ended January 27, 2008, a decrease of 16%. According to Nvidia, discrete GPU sales were down 47% quarter over quarter in Q4 FY 2009, workstation business declined by 44% sequentially, chipset business dropped by 51%.

Mr. Huang claims that during the global slump in demand those, who need value will go a product that just provides everything they need and will no opt for more, whereas those looking for performance will still find money to get their higher-end device.

“People who want performance still will go for performance: the netbook will hardly serve their needs. But for a lot of people in the mid-range part of the marketplace the netbook is clearly going to disrupt that,” the head of Nvidia told analysts.

Nvidia is currently trying hard to push its own low-cost Ion platform designed for Intel Atom processors, but with no actual success so far. The company does not want potential users to believe that Nvidia Ion-based devices are cheap and incapable, formally, the GeForce 9400M core-logic inside Ion supports DirectX 10 capabilities, hardware-accelerated high-definition video playback and other advanced capabilities.

“Intel Atom with the Ion [platform] creates a fully-featured notebook: it is fully capable of DirectX 10 3D graphics, high-definition Blu-ray disc playback. Just about anything you want to do on your computer is possible with Intel Atom processor and Nvidia Ion,” proclaimed Mr. Huang.

It should be noted that considering the fact that none of the netbooks is equipped with a Blu-ray disc drive or a high-definition display, it is hardly possible to play modern games or watch HD movies on such machines.

Tags: Nvidia, Geforce, Nforce, Ion, Intel