By Noel Randewich
LAS VEGAS (Reuters) - Nvidia offered a sneak preview of a hand-held gaming device, powered by its latest "Tegra 4" processor, that it hopes will help it go up against Sony Corp, Microsoft Corp and other device makers in consumer gaming.
Called "Project Shield", the device - a cross between the controller familiar to most console gamers and a small tablet display - will be sold direct to consumers, an unusual move for a company best known for computer graphics cards and mobile processors.
The unveiling late on Sunday took the industry by surprise. Nvidia offered few details beyond basic specifications. Executives said that when it launches, it will be able to run Google Android games now found on smartphones and tablets. It can also stream games from PCs.
"Everything you do with your Android device just works here," Chief Executive Jen-Hsun Huang told reporters in Las Vegas ahead of the Consumer Electronics Show.
"This is the culmination of five years of work."
Nvidia is keeping a tight lid on Project Shield, with only a handful of closely guarded prototypes circulating within the company, a source at Nvidia told Reuters. Huang would not say when the device -- or the Tegra 4 that powers it -- will begin selling, or at what price.
Tablets and smartphones support limited control functions like swiping and tapping. By integrating a controller with a screen, Nvidia may be angling for hardcore gamers who play shooter and other intense action games on consoles.
Developers have not yet been successful in bringing such titles to mobile devices like the Apple iPad, analysts say.
"At first glance, this does seem more primed for attacking the mobile and tablet consumer sector rather than impacting the Microsoft or Sony HD console experience," said Jesse Divnich, an analyst at video game research firm EEDAR.
Others said Nvidia may be trying to vie for a bigger slice of the console gaming market. Microsoft now uses graphics chips from rival Advanced Micro Devices Inc for its Xbox, the market leader.
Apart from a growing assortment of game-capable tablets and smartphones, Sony and Microsoft are both expected to release next-generation versions of the PlayStation and Xbox this year.
Nvidia's new device will support the popular game digital download service "Steam", bringing on board top-selling titles like "Assassin's Creed" and "Battlefield 3".
"Nvidia has really been a hardware consumer-facing company for nearly 15 years in the graphics card business," PJ McNealy, CEO of Digital World Research, said. "It'll be a challenge to leverage that legacy into a broader hardware business."
Beyond gaming, entertainment features like Hulu and Netflix have become a unique selling point for Sony's PlayStation and Microsoft's Xbox consoles.
"Nvidia is many years way from trying to penetrate that market," Divnich said.
With PC sales suffering due to economic uncertainty and a growing consumer preference for tablets, Nvidia has also staked its future on leveraging its graphics expertise to make high-performance processors for mobile devices.
The Tegra 4 chip, with four central processing cores, will be Nvidia's first to include LTE technology for high-speed telecommunication networks.
The company has made inroads in tablets but competition from larger rival Qualcomm has some on Wall Street concerned the company may struggle to keep its mobile business growing fast. Qualcomm already offers 4G technology in its chips.
Huang said Nvidia's newest Tegra boasts improved image processing capabilities for digital cameras in phones and tablets. Huang also said the Tegra 4 chip lets tablets load web pages more quickly than devices using rival chips.
The previous Tegra 3 is used in Google's Nexus 7, one of only a handful of tablets to make inroads against Apple's iPads. The Tegra 3 chip is also used in Microsoft's recently launched Surface tablet.
At the event, Huang also introduced a cloud product called the Nvidia Grid, a server and software package designed to remotely handle graphics computations for video games instead of on consoles like the Xbox in game-players' living rooms.
He said Nvidia would sell the Nvidia Grid packages to companies interested in hosting and streaming cloud-based video games.
(Additional reporting by Malathi Nayak in San Francisco; editing by Andrew Hay)