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Technology Stocks : MSFT: new NT kills CPU makers.
MSFT 517.16-1.6%12:57 PM EDT

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To: Aaron Cooperband who wrote ()10/17/1996 2:24:00 PM
From: Mark Finger   of 15
 
Microsoft has already been shipping version that fun on other chips for several years. (I have plenty of old CD's--unused--from those from the various NT releases and test versions). Let us look first at market share and who makes what.

DEC--they have the Alpha chip. They have also been one of the strongest supporters of NT, expecting to be suitably rewarded for being first. They have had nearly every version of NT (including 3.1, I believe) available on them. The total run of Alpha chips probably is about 1-2M per year. I do not know of any significant non-DEC vendors who use this chip.

SUN--they have the Sparc chip. There have been some Sparc clone makers in the past, but few major vendors (unless there is a Japanese one that I am not aware of). I would be surprised if they currently ship more than 1M chips per year. I do not believe that NT is available on this chip, because I do not believe that it has a switch that will allow it to operate in "little-endian" mode (same byte order as Intel chips); this is a requirement for NT.

MIPS--This is the original company that developed the chip. I believe that they were bought by someone (SGI?). SGI, NEC and some other companies use this chip, especially in graphical workstations. These are considered to be the premier workstations for doing high-level graphics. There is also an ad stating that Microsoft does a lot of their NT development on this chip. However, I would be surprised if they sell more than 2M chips per year.

RS6000--This was originally developed by IBM, and then updated by a consortium of Apple, IBM, and Motorola. Both IBM and Motorola produce it. There is now a version of NT that runs on it. This (in its various versions) runs the Apple Power PC's, AS/400, IBM workstations, and some of the IBM MPP machines. IBM/Motorola may make over 5M chips per year.

Intel probably produces 50-70M chips per year, plus many more for older usage (version that may be used in dedicated controllers, like industrial controls). AMD, Cyrex, ... and the other clone makers may ship several million in addition.

When you compare the numbers, it is immediately apparent that the other markets are much too small for any software developer to bother with, except for a few who need the absolute performance.

There are other factors working. Most of the other chips are used in non-NT operating system machines. Even though Intel may have a current higher production cost, it probably has a lower R&D cost per chip because of its volume. Finally, the only chips above that might have a performance advantage great enough (>50%) over Intel may be DEC and MIPS, but that is generally short-lived for any specific chip.

Finally, where are the additional companies using the chips and which will really drive the machine costs down to competitive level for most PC's. Only Apple is even close to PC prices, and that is primarily on the lower end machines.

I see a "chicken and egg" problem for any of the other chip vendors. The one thing that might break the problem would be the NC (Oracle specification). If this starts building more than 10M machines a year, this could be a boon for 1 or 2 of the clone chip makers, plus helping Sun (because it owns Java).

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