>> The world wide gult in this generation dram (old dram) isn't relevant to rambus. What I see a NEW market of 140 billion for next generation memory. If their are a million rdram equiped pc's this time next year, that's a million fold growth in rambus powered pc's. <<
Steven,
I'm sorry, but I have to disagree with you. Fast, RDRAM-based computers must compete in the marketplace with "slower" (but very fast) computers based on older, cheaper technology. The PC market is changing; the slow machines are now fast enough to do almost anything, and they are being sold in huge quantities.
My background, before starting my computer service company a couple years ago, was in PC software development. I wrote software for IBM compatible PC's since 1982, the year the first IBM PC came to market. I worked on many, many software development projects. One of the first things that is done at the start of a software development project is to establish space and performance requirements of the software, BASED ON THE CAPACITY AND PERFORMANCE OF THE CURRENT SWEET SPOT IN THE MARKETPLACE. This only makes sense; you want your product to run on as many computers as possible, making the market for your software as large as possible.
Each downtick in the cost of DRAM (and other hardware used in these "low end" systems) accentuates the price difference between these systems and new, higher end systems which will use RDRAM. Since there is currently very little advantage to be gained by buying a 400MHz Pentium II versus a 233MHz Pentium system, most people are opting for the 233 machine, which in turn continues to push out the date when software requiring a higher powered system will arrive on the scene.
(I'm typing this on my 200MHz AMD K6-based computer, which is more than adequate for my needs; I just added 32MB of EDO RAM to it for $30.)
Everyone knows the next generation is coming. Many know that DRDRAM will play a prominent, dominating role when that generation finally arrives. But how long will it take to get here? What software will be the catalyst that will thrust these new, 500+ MHz computers into the mainstream (which is where they must be for Rambus to have significant earnings). There is no software for the masses on the horizon that requires such power; few will pay a substantial premium for it. And what will the price of DRDRAM have to be then? DRAM prices have fallen 40% since Christmas. If DRDRAM prices must fall in tandem to remain competitive, what does that do to royalties?
The personal computer market is price sensitive, and is becoming more so. Prices or market share will have to give. Each downtick in current computer prices flattens the future Rambus earnings growth curve, and nudges it further into the future. This is reflected in the current price action of the stock.
Ask yourself these questions: Why would I need, and why would I buy, a 500MHz Pentium with 128MB of RDRAM? How many other people would do the same?
Slowly becoming a Rambus bear,
Tom |
