They just eat it, and balance out last qtr gain against this qtr loss to get cash flow neutral.
Next qtr is the "turning point" with revenue from MX and S3D starting to hit the books.
Right now, with i740 flooding the market, it looks pretty crappy.
Maybe there is something to this Intel antitrust suit, afterall.
Did you read Ron Yara's comments against Intel regarding the Plato?
interactive.wsj.com@2.cgi?billlin/text/wsjie/data/SB897256375633435500.djm/&NVP=&template=news-search.tmpl&form=news-search.html&dbname=wsjie%2Findex&dbname=autowire%2Findex&words=Ron+Yara&any-all=AND&maxitems=30&HI=1
Without Intel's microchips -- and specifications as to how they work --
makers of personal computers and other chips are all but out of business.
Customers such as Intergraph Corp., a maker of graphical workstations
based in Huntsville, Ala., and Digital Equipment Corp., Maynard, Mass.,
have alleged in lawsuits that Intel demanded that they return vital technical
information after the companies sued Intel for patent infringement. Some
Silicon Valley competitors such as S3 Inc. have complained to FTC
investigators that Intel denied them access to specifications they needed to
make accessory chips.
"They just control too much of the platform," says Ron Yara, a 10-year Intel
veteran who went on to found S3. "It's dictated by one company."
Michael Hackworth, the chief executive officer of Cirrus Logic Inc., says
his company sold off its chip-set unit to National Semiconductor Corp. in
August 1994 because Intel shut off the flow of information about coming
microprocessors. He has declined to provide further details.
Jerry Chang, chief executive of chip-set maker Opti Inc., says his company
also lost access to advance information about microprocessors. "As a result
we were left far behind them in product development," he says. "It's an
impossible battle that we cannot fight."
Some three dozen chip-set makers have left the business since Intel's entry.
The price of the chip sets has also risen over the past year.
Intel denies that it used its position in microprocessors to take over the
motherboard and chip-set businesses. In making those products, Intel says,
its goal wasn't to build market share for motherboards and chip sets. Rather,
it says, it wanted to hasten acceptance of its new Pentium microprocessors
by making sure that Pentium-based machines could get on the market
quickly. Mr. Dunlap argues that the company is under no obligation to share
details about proprietary developments in those products, though it has been
willing to license that information to companies with equivalent technology to
exchange.
Intel this year also began making its own graphics chips, and announced
plans to do more graphics processing on its microprocessors. Here again
competitors say they are being frozen out.
S3, based in Santa Clara, Calif., says it asked Intel in late 1996 to support an
inexpensive two-chip combination that combined graphics and chip-set
functions. Specifically, it says it asked Intel for a letter telling potential
customers it was all right to use the chip combination. S3 also sought to
license technology from Intel that would enable it to design future chip sets.
At $20 each, the set, code-named Plato, seemed well-suited for PCs that
cost less than $1,000. S3 spent millions to develop it and says it had five
ready customers.
But Intel declined to endorse Plato, saying it slowed down computer
performance, and S3's customers began getting cold feet, Mr. Yara says.
Intel later stopped sharing information that S3 needed to develop successor
products, including data about a new socket that connects graphics chips to
Intel's Pentium II microprocessor.
Mr. Dunlap and other Intel executives insist the company treated S3 fairly,
expressing legitimate technical objections to Plato and insisting on getting
compensation for sharing proprietary data. Mr. Yara and other S3
executives concede that their company and Plato had plenty of unrelated
problems. But Mr. Yara says Intel later actually asked S3 to revive Plato
when Intel needed cheaper graphics functions because of demand for
sub-$1,000 computers. Intel declined comment on that issue.
In any case, by that time, S3 had disbanded its Plato development team.
Intel later announced a similar product for shipment next year. That Intel
product, Mr. Yara argues, shows that S3 was on the right track with Plato
and that Intel has too much power.
"It comes down to whether a monopoly can squelch competition," says Neal
Margulis, S3's former vice president of research and development. |
