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NVIDIA’s Major Coup: How AMD Lost a Man Who Brought All Next-Gen Console Deals

The fact that AMD won all three next-gen console deals is probably one of worst-kept secrets in Silicon Valley, but little was known about the history of how next-gen consoles are coming to be. The following story culminates with the news that Bob Feldstein, one of key executives at AMD – decided to leave the company for NVIDIA.

Today, Wall Street Journal broke the news that Bob Feldstein, a person with three Vice President titles (VP Business Development, VP Strategic Development, Strategic Dev) left AMD for NVIDIA Corporation. Under the California law, there are no enforceable non-compete clauses, thus Bob is free to exchange Boston for Santa Clara, and nobody will be able to say a thing.

According to a statement from NVIDIA, the new job for Mr. Feldstein will be to "help us think through current and possible future technology licensing projects." In order to understand just what Bob did at AMD and before that at ATi Technologies, we need to go back by over a decade to May 2002. Microsoft and NVIDIA ended up in court over pricing of the MCP-X and NV2A chipset that powered the first Xbox console. After arbitration ruled in NVIDIA's favor, the GPU giant from Santa Clara was effectively out of the deal for the Xbox Next (aka 360). Even though Jen-Hsun Huang released a statement saying that two companies will take "partnership to the next level", the reality was that Microsoft decided to silk-screen its logo onto all of the hardware for the next-generation console.


Xbox 360 – Creation of a New Business Model

Here's where Bob Feldstein and his team saw a giant opportunity for ATI, which was producing Radeon graphics cards for gamers, as well as the "Flipper" graphics chip for the Nintendo GameCube console. ATI went on to negotiate with Robbie Bach and Steve Ballmer and ultimately sealed the deal which created a completely unheard strategy among the GPU developers of the time – license its core R500 technology to Microsoft in a chip codenamed Xenos, which will carry two logos – 90nm GPU die will carry 'Microsoft Xbox' while 'NEC' logo will be imprinted on 10MB of eDRAM.

Xenos chip was the base for all the success AMD will receive afterwards. Even though the company ceded the "ego" aspect of branding themselves on the chip itself, Microsoft as a customer brought significant revenue, since Microsoft had to pay for every die shrink (Xenos went from 90nm to 65nm, 55nm and ultimately 40nm), while ATI was free to develop future parts.

Bob oversaw the creation of licensing mode where ATI provides the technology, and offers both bragging rights and cost-effective options. At the same time, Sony ran into problems with the idea of putting two Cell processors inside its upcoming PlayStation 3 console. The process technology hit the wall at 3.2 GHz and the company panicked, going to NVIDIA and asking them could they create a graphics chip for PlayStation 3 with less than year and a half ahead of launch (some sources say 15 months). NVIDIA charged through the roof for what was a GeForce 7800GT on an MXM module, using 128-bit interface instead of a 256-bit one (on the desktop). However, Sony got rock solid drives and they were happy with NVIDIA.


SNAP Fail, Bob's team Rising to Fame

It was no secret that AMD and NVIDIA had a secret agreement over the first Xbox, which was supposed to use the Duron CPU and MCP-X and NV2A chipset. AMD wanted NVIDIA, and NVIDIA wanted AMD. Serious negotiations lasted throughout 2005, and there was one limiting factor – Jen-Hsun Huang insisted that he becomes the CEO of AMD, while Hector Jesus Ruiz would become the President of the company. HJR could not accept to that and in the battle of two egos, Hector won and the deal was dead by September 2005. Truth to be told, by comparing AMD's and NVIDIA's market cap today, one must wonder what might have been. AMD started to negotiate the acquisition of ATI Technologies.

At the same time, ATI helped Microsoft to beat the company's primary target, which was Sony PlayStation 3 console. However, neither Sony nor Microsoft had the slightest idea that Nintendo Wii will walk all over their next-gen high-definition blah blah consoles and become the winner of the 7th generation of consoles.

Two things happened at the same time – Sony wasn't satisfied with the attitude shown by Nvidia's key employees. According to sources very close to heart of the matter, "working with NVIDIA is the same as going to the expensive dentist. You know it will get the job done and that your end result will be great, but that does not feel you will feel great. In fact, you will feel like sh**."

Second thing was Intel and the doomed project called Larrabee. Intel was courting both Microsoft and Sony (what happened to Nintendo deserves a separate story) with the x86 Core-based CPU and Larrabee-based GPU. Things were going well for Intel with Microsoft (Sony showed them the door), but after it turned out that Larrabee was an utter failure which infringed on NVIDIA's and ATI patents (ATI patents were 'no problem' due to AMD-Intel cross-licensing agreement), doors were closed shut.


Sealing the Deal

AMD saw what Intel was trying to do and in order to beat Intel, they offered the same thing as Intel – we have the APU (CPU+GPU) for low-demanding tasks, and a fully-fledged GPU utilizing the R1000 architecture, which should be known as the Sea Islands or HD 8000 Series. There are also rumors that the next-gen hardware supposedly utilizes R900/Southern Islands/HD7000 Series, but that will not be known until the consoles actually hit the market. With hardware makers unwilling to commit to the next generation consoles and insisting that the current consoles should last until 2016, the hardware just kept on being refreshed, causing a lot of stress for the engineering team.

Be that as it may Bob led the team to negotiate Sony PlayStation 4 and ultimately, ended with an impressive deal. Out of three next-generation consoles, three of them will have AMD GPU, and at least one will have an APU as well.


Bob's Arrival – Can NVIDIA stop being a nightmarish Dentist?

If you were AMD, how would you react to the person who saved your bacon more than once…? Well, what happened at AMD will remain a mystery, but the fact of the mater is that we heard from a lot of sources that they don't feel appreciated.

There's no easy way of saying it, but over the past couple of years, AMD lost a lot of talent. First and foremost, the company had to make sacrifices in order to pay off its massive debt of around six billion dollars. Thomas Seifert replaced Bob Rivet and did a small miracle in preventing the company from going down under. However, brilliant talents were lost in failures to recognize which projects bring money, and which don't. Netbooks, Tablets, and obviously, consoles – are projects all lead by people that changed the way how the semiconductor industry sees opportunities. Bob's departure maybe hits AMD even more than the departures of hardware engineers, since he was the instrument that created a whole new way of selling chips (which did not exist in the GPU world before). The ways how ATI, i.e. AMD engaged its customers in the likes of Microsoft and Nintendo erased a lot of bad blood, but it is obvious that Bob channeled Sinatra's "I did it my way" and cashed out. NVIDIA now has an ally which knows how to sort out the relationships which turned quite catastrophically for the company, with a lot of hits and misses. After all, if Qualcomm did not messed up its schedule, Surface tablet would have ran on Snapdragon, while Sony wasn't enthused about working with NV ever again.

With Bob Feldstein belonging to the green camp now, we might lose a few egos and NV just might get a large number of customers. However, he needs freedom to operate in order to assemble the team of people which will be at client's service, without sending every other email mentioning NRE's for products which are supposed to work in the first place.

NVIDIA just scored big for Tegra, Project Denver and GeForce. Only time will tell how fast they can develop, though.

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