Cyrix should license GX86 to PC/Home Appliance industries
To All:
The following is my original emails of my suggestion to Cyrix during
August, 1996 and received no reply from Cyrix up to this date. The
original Cyrix thread has become too bulky. I am taking advantage of
this new thread so that this stratigy proposition could be easily
traced to this #2 post here.
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To: Cyrix Corp. From: a small shareholder Aug. 2, 1996
Dear Cyrix Managers,
It has been a great disappointment for current 2nd quarter loss. We
have been advised that the 3rd quarter would face loss as well. As
the results, many enthusiastic Cyrix shareholders/investors have
turned their backs to CYRX. We have encountered one of most
unbelievable scenarios that a technology leading firm could not
compete well with its competitor in spite of its superior technology
in high tech business.
Q: Is this the end of Cyrix Corp.?
A: Definite not! However, if nothing is changed, Cyrix Corp. would be
a victim to be bought out. Managers would be shamed and humiliated
while its stockholders would suffer significant financial losses from
their investments in CYRX.
Q: How to make a turn around and make profits?
A: It has been proved that Intel is a much respectable competitor for
Cyrix. Cyrix has to compete with it in a very different way to make
profits to lead to a successful business venture to benefit its
talented employees and shareholders.
But how to do it under the current status? I am to bring completely
new concepts for Cyrix managers to bring our stock to its real
values: $1,000!
Strategy #1: If you could not compete with your competitor
effectively, KILL IT!
It has been proved very clearly that Cyrix could not compete with
Intel in regular way by its advanced technologies over Intel under
lots of reasons. Whatever business practices that Cyrix takes to
damage Intel would benefit Cyrix greatly. How to kill such a powerful
empire? Make its business unprofitable by licencing GX cheaply to
whoever has the interest to build/market cheap NC or PC. When a $495
or less NC DOES the same jobs as a $2000 Intel PC, who wants to pay
for an "Intel Inside" PC? That would KILL it and slam INTC to its
reasonable low 10s by 2000.
Strategy #2: If you could not get business from your competitor's
accounts, DESTROY their businesses!
Cyrix could not get businesses from the current major PC OEMs and owes
them nothing to consider the consequences to bring down their
businesses.
Cyrix should use GX to build its own wide customers base and make
them so successfully that effectively destroy the businesses of
"Intel Inside" OEM businesses by dragging away business opportunity
from expensive PCs to cheap NC.
Strategy #3: Licence 5GX86 at $25 to everyone!
Instead of producing GX chips and keep inventory for customers at $70
apiece, licencing GX to anyone for $25 apiece as the way that
Microsoft licences DOS/Windows to every OEM, big or small, whoever is
willing to pay.
Why should Cyrix worries about the manufacturing sources and capacity?
By licencing GX, customers could solve their sourcing problems with
IBM, DEC, Intel, AMD, SGS, TI etc. directly or these fab manufactures
could find their own customers to sell the chips. By providing vendors
with cheap and powerful GX chips, innovations based on GX would be
developed to lead businesses and profits to everyone involved.
By licencing GX, Cyrix could have 100% margin. All Cyrix has to do
are acting as a technology consultant or coordinator to OEMs to ensure
that the right NCs designed and worked properly. There is no risk on
inventory depreciations or over stocked. There is no need for
additional capitals. There is no need to low the licence fee since it
is so low.
How much Cyrix could earn from licencing GX? If the current estimates
that the PC market could reach 100 millions units in 2000, $495 or
less (than $199) NC could match the same figure to 100 millions units
at the same period IF NC could provide exactly same functions and
features as PC. However, if NC could provide exact same functions as
PC, NC could take-away 50% business from PC and make its market
reaches 150 millions units. If Cyrix takes 50% of this NC markets,
say 75 millions, Cyrix is to run the risks to have the royal fee
income of
75 millions x $25= 1.875 billion from GX alone in 2000.
The cheap licence fee will bring all the major home appliance
manufacturers and all kinds of known and unknown marketing powers to
promote Cyrix GX Network Computers in every corner of the world to
chase their own profits. Comparing to this most power sale force on
earth, the current PC OEMs could look weak as Cyrix vs Intel today.
Cyrix is the only company could scarify the short term profitability
of GX to exchange for the huge long term corporation success by
continuous R&D.
Once again, I would like to ask and urge Cyrix Managers to make the
best usage of your technology to swap the whole NC world market to
your pocket just like that Intel takes the PC market to itself.
If the recommended strategies were well taken and lead Cyrix to the
success that it deserts, this millionaire-minded man should like to
be rewarded by 1.0% commission from every CPU sales amount that
exceeding 30 millions pieces annually.
Accordingly, I look forward to your kindly response soon.
Fuchi ... who loves Cyrix's innovations
cc. Jerry Rogers - President and Chief Executive Officer
Jim Chapman - Senior Vice President, Sales
Kevin McDonough - Senior Vice President, Engineering
Jay Swent - Senior Vice President, Finance and Administration
Mark Bluhm - Vice President, Technology
Nancy Dechaud - Vice President, Manufacturing
Russ Fairbanks - Vice President, General Counsel and Secretary
Tim Kinnear - Vice President, Finance
Robert Maher - Vice President, Engineering
Lew Paceley - Vice President, Marketing
Everett Roach - Vice President, Asian Sales
Steve Tobak - Vice President, Corporate Marketing
Evan Fitzmaurice - Investor Relationship
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