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Technology Stocks : Diamond Multimedia
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To: lml who wrote (3513)3/26/1998 7:38:00 PM
From: Jonathan Quick  Read Replies (2) of 4679
 
lml,

With new entry level consumer systems running $600 before the end of the first quarter, where do you suppose we'll be at the end of the year when sales really heat up? It's hard to imagine consumers will flock to upgrades that cost more than 50% of the cost of an entirely new system. In this category I'd place boards based around the Permedia II, boards based around the Nvidia Riva, and boards based around anything from Rendition or 3dFX. Diamond has exposure in the consumer arena.

I don't see Diamond as much of a factor in the commercial segment. The Permedia II is about the only thing in the Diamond lineup that might appeal to most corporate customers, and it's still pricier than the nearest Matrox equivalent. Workstations are an entirely different beast. Servers and workstations provide lower volumes and high margins. Competition isn't quite as nasty. Diamond has some pretty decent offerings in the workstation category.

From where I'm sitting DIMD is a mixed bag. Products intended for gamers and the rest of the consumer market aren't going to yield the type of margins they have in the past. Diamond's offerings for workstations are competitive, but volumes are hardly enough to ensure future growth. I see Diamond's communications products as a joke. Shotgun is a nice idea, but then the timetable for ADSL implementation has been moved up considerably in recent months. I doubt Supra will be able to stay competitive with 3Com in the long run, regardless of the predominant standard.

Jonathan
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