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Technology Stocks : Amati - MAIN THREAD
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From: Techie5/30/1996 8:44:00 PM
   of 700
 
Hi Jingbin, now I have a few questions:

Your comments sort of suggests that the agreement between Amati & Motorola is exclusive in the sense that MOT won't sell the chips to anyone other than Amati. Though I haven't read the actual agreement (just the press releases), I seriously doubt that this would be the case. Now if we assume that MOT will be able to sell the chips to whomever they want as long as they pay the royalties back to Amati. What difference does it make if Amati licenses the technology to a second source? They will collect from the second source just as they collect from MOT.

If the agreement is indeed exclusive, basically if the ONLY supplier of the modems IS indeed Amati, the RBOCs won't go for it. They are too small no matter how wonderful their technology is.

Bottom line, my view is:

Patents indeed matter.
Amati should license as well as manufacture to ensure THEIR technology dominates the market.

Your Gates example is valid to some extent, but you have to remember, when he started out, not many people used PCs, so he was able to sneak in at a slower rate and most importantly he didn't have to manufacture. Now people are anxiously waiting for bandwidth. The telcos have to deliver. There is sizable competition even if it's not as good a technology. So Amati doesn't have much time to ramp up production to meet the ENTIRE demand.

But hey, I have been wrong many times!
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