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Nvidia unveils virtual graphics server in push beyond PCs

By Noel Randewich

SAN JOSE, California (Reuters) - Nvidia Corp unveiled a server product on Tuesday that allows low-end computers to perform graphics-intensive tasks, the chipmaker's latest foray into new markets as its traditional PC market loses steam.

As consumers increasingly choose tablets and smartphones over personal computers, Nvidia has been looking for areas to apply its graphics chip expertise, including enterprise computing, mobile devices and hand-held game devices.

Chief Executive Jen-Hsun Huang said the new product, called the GRID Virtual Computing Appliance, would give small- and medium-sized companies access to sophisticated graphics computing power for tasks like image processing without the need for top-tier PCs.

"It's as if you have your own virtual high-end PC under your desk," Huang said during a presentation at an industry event in San Jose, California.

The product is made up of a server rack filled with Intel Corp's Xeon central processors, memory chips and several of Nvidia's high-end graphics processors.

It is aimed at companies with limited IT infrastructure and will be priced starting at $24,900, plus $2,400 a year for a license.

Nvidia is partnering with enterprise technology companies like Hewlett-Packard Co, International Business Machines Corp and Dell Inc to sell a more sophisticated virtual graphics product for larger companies.

At the event, Nvidia also announced upcoming Tegra mobile processors, including one codenamed Logan expected to be launched in 2014. Another, codenamed Parker, will be 10 times as powerful as current chips when it is released in 2015, Nvidia said.

Nvidia has met some success with its Tegra mobile chips in tablets, but the company, best-known for its high-end PC graphics chips used by gamers, faces stiff competition from Qualcomm Inc.

In a presentation to analysts later on Tuesday, Huang said Microsoft's launch of its Windows RT operating system last year fell short of his expectations.

Microsoft's own Surface brand tablet, which runs Windows RT and uses Nvidia's Tegra processors, has not captured customers' imaginations since its launch last October.

"Windows RT is disappointing to us because we expected it to have sold more than we did," Huang said. "Everyone expected it to have sold more than it did."

Gartner estimates that Microsoft sold fewer than 900,000 Surface tablets in the fourth quarter, which is a fraction of the 23 million iPads sold by Apple Inc. Microsoft has not released its own figures but has not publicly disputed Gartner's.

The graphics server products unveiled by Nvidia on Tuesday follow other recently announced ventures beyond PCs and tablets.

In January, Nvidia showed off a different cloud server and software product called the Nvidia Grid, designed to remotely handle graphics computations for video games instead of on consoles like the Xbox in game-players' living rooms.

Nvidia also plans in the second quarter to start shipping a new hand-held gaming device with its upcoming Tegra 4 processor and a built-in screen. The device, referred to as Project Shield, runs Android games currently found on smartphones and tablets and can also stream video games from PCs.

The company has also been promoting its graphics chips to be used in supercomputers for tasks they specifically excel at, like climate prediction, physics simulations and oil exploration.

Nvidia's stock closed down 0.6 percent at $12.47 on Nasdaq.

(Reporting by Noel Randewich; Editing by Leslie Adler and Richard Chang)

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