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Forward Spin
The 3-D race is on
After a lot of false starts, 3-D is hot. And Intel is looking hungrily at
a $1 billion market. But S3 got there first
By Bill Snyder
Who's afraid of Andy Grove?
Not Gary Johnson. S3's feisty
CEO figures that Intel's
expected entry into the three-dimensional technology
market is going to be something of a yawner. Intel, he
says, may have run roughshod over the motherboard
and chip-set businesses, but Grove and company
"aren't going to wreak havoc in this market."
Bold words. But Johnson, whose company makes
graphics chips, isn't the only one who thinks the
proverbial 800-pound gorilla may slip on the graphics
business. Major Intel 3-D products are late to
market--and the buzz in the industry is that when they
arrive late this year or early 1998, they may not be all
that much of a threat. But the big news right now isn't
Intel. It's the strength of the 3-D market. After fits and
starts, it's finally beginning to take off. Estimates for this
year's shipments of 3-D-enabled accelerators range
from about 25 million to 40 million--compared with
about 8 million last year. Mike Feibus, a principal of
Mercury Research, figures the market for 3-D hardware
for PCs will hit $1 billion this year and $2.4 billion in
three years.
Sure, bullish estimates of growth in this market have
been way off before. But now, the hardware--and the
software--are starting to look mature. Last year,
insiders joked snidely about "hardware deceleration."
Software actually ran better without the accelerator
chips. "Most of the chips are trash," John Latta,
president of 4th Wave, an Alexandria, Va., consultancy,
said last spring. But the second generation of graphics
chips, just coming to market, is faster, has better image
quality and allows for better game play, he says.
Another of last year's most troublesome problems--the
lack of a standard API--has not been resolved. But a
solution is closer. Microsoft, under sharp criticism from
ISVs that said Direct3D was not up to the job, expects
to release an improved version in June, says Mark
Kenworthy, a Microsoft group program manager.
"There were complaints, and some were valid," he
concedes.
Without a single API, game developers were forced to
write to proprietary interfaces developed by accelerator
manufacturers. That was good for hardware vendors
that could pay developers to write to their APIs. But it
made life tough for ISVs that wanted their games on as
many machines as possible. "That's about as much fun
as having your teeth cleaned," grouses Bobby Kotick,
CEO of Activision, a Los Angeles developer. Because
so many ISVs decided to wait, Christmas '96 was
something of a 3-D disaster.
Kotick will be spending less time in the dentist's chair
this year. Despite lingering criticism, Microsoft's API is
emerging as the standard. ISVs will still write to other
APIs, but Direct3D is now looking like a safe choice.
And that will ensure a reasonable--if not
overwhelming--number of 3-D games on the shelf by
Christmas.
You'll also see the beginnings of PC-based 3-D in the
commercial space later this year--and a big surge in
1998, says S3's Johnson. "We're going to drive down
the price so it will be a check-box item," he says. But
price alone won't make 3-D pervasive in the
commercial space. Compelling apps will. "Oracle is
building VRML tools into its databases to allow better
navigation and visualization," says Neal Trevett,
marketing VP for 3Dlabs, a graphics chip maker.
Lucent Technologies' Visual Insights allows network
administrators to monitor Internet or other network
traffic in 3-D, and software from other vendors renders
city streets so well, an architect can remove smog with
a click of the mouse.
With all of these opportunities, it's no surprise that
some 36 hardware vendors are chasing the market.
But the field is going to narrow, says Dataquest analyst
Geoff Ballew. For now, S3 is the company to beat. But
the successful challenger isn't likely to be Intel. At least
not this year. "The Auburn processor (Intel's 3-D chip)
could well be obsolete by the time it's introduced," says
analyst Charles Boucher of UBS Securities. And
samples of the chip set that will enable Accelerated
Graphics Port--a very fast data path designed for
3-D--won't be in the hands of OEMs for another few
months, says Mercury's Feibus.
While Intel struggles to catch up, S3 is acting like, well,
Intel. Last year, S3 dethroned much larger Cirrus Logic
as the No. 1 graphics vendor in the industry. Now it's
entering new markets, building foundry capacity and
taking an equity stake in smaller companies whose
technology might push the graphics market ahead. "We
want to be an industry enabler along with Microsoft and
Intel," says Johnson. S3, which does not sell a retail
product, has even launched its own version of the "Intel
Inside" campaign with a blitz that includes radio spots
and ads in Sports Illustrated and Rolling Stone. "We're
going for mind share," says S3's Johnson.
Mind share for a component maker? Analysts are a bit
skeptical. But with or without the mind share, S3 has
captured a big chunk of market share. Last year, the
Santa Clara, Calif., company sold between 5 million
and 6 million 3-D accelerators, out of a total market of
about 8 million, according to Mercury Research data.
But watch out for the gorilla. Next year's combination of
demand for 3-D in the business space, the arrival of
AGP and Intel's unmatched financial strength and
manufacturing prowess could be very powerful. "You
always need to be paranoid about a company like
that," notes Johnson. Paranoid? Realistic is more like
it. There are plenty of banana peels to go around. |
