How much computing power does a person need in a mobile device? Nvidia Corp. (NASDAQ: NVDA) is betting that the answer is, “All you can get.” The company has announced today the release of its Tegra 3, quad-core processor, which will be available in an Asus tablet next month.

Nvdia’s chip not only claims four processor units, but a fifth, low-power processor that provides minimal computing power for those times when the device is not playing movies or doing other compute-intensive tasks. The company claims a battery life of 12 hours for high-definition video playback. The chip is based on the Cortex A9 design from ARM Holdings Corp. (NASDAQ: ARMH), and represents a performance leap over competing mobile chips from Intel Corp. (NASDAQ: INTC), Apple Inc. (NASDAQ: AAPL), Texas Instruments Inc. (NYSE: TXN), and Qualcomm Corp. (NASDAQ: QCOM).

If processing power were the only consideration when purchasing a tablet or smartphone, Nvidia might sell truckloads of these chips. That’s typically not the case, however. The device that is built around the chip most often carries the burden, and there is no tablet yet that has been able to break Apple’s iPad stranglehold on the market for tablet devices.

Apple’s strength is its unified hardware/software combination and its first-to-market position. Any competing device must offer vastly superior performance at a lower cost in order to wrestle market share away. So far, no tablet has been up to the challenge.

The Asus tablet, dubbed the Eee Pad Transformer Prime, will cost $449.50 when it comes to market next month. The lowest priced Apple iPad 2 rings in at $499. That’s not much of a difference, especially considering that the Asus tablet will not have available the latest Android operating system, code-named Ice Cream Sandwich, from Google Inc. (NASDAQ: GOOG) at the time of the tablet’s launch next month.

It’s also only a matter of time, of course, before Apple, TI, and Qualcomm meet the Tegra 3’s specs because they all use the ARM design. That’s how the high-tech business works. Nvidia, which has a roadmap going out another three generations can continue to leapfrog ahead, but breakthroughs become fewer and farther between and there’s no reason to believe that a competitor won’t leap over Nvidia.

The biggest problem remains Apple’s tablet market share. The company grabbed more than 80% of the market in 2010 and is expected to hold onto 65% in 2011. In 2012, Apple’s share has been estimated at 57%. If Nvidia could grab the other 43%, that would be a coup. That’s very unlikely, though, as competitors’ chips are likely to be priced lower and tablet makers may have no choice but to compete against one another — not Apple — on price.

Intel has yet to make any real noise in the mobile market, but any day now there should be something coming out of its acquisition of Infineon, another ARM-based chip maker. The company has begun to push back at Apple’s MacBook Air with a device class it calls the Ultrabook. But Intel needs to get a low-power, high-performance mobile chip out of its Infineon people real soon now. That’s where the market growth is and Intel can’t lag too far behind if it wants a piece of the action. Of course Intel’s marketing muscle (read, “cash”) makes up for a lot of sins.

Nvidia’s shares are off more than -2% in the first hour of trading this morning, as the entire market is reacting negatively to the situation in Europe. Nvidia stock is trading at $14.75, in a 52-week range of $11.47-$26.17.

Paul Ausick

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