Well, I'd like to sound hopeful here, so let me raise a couple issues and perhaps some others can address them. I'd question Sigma as an investment choice right now, but maybe there really is a future here. Here goes:
1. SD has a significant, if short, history in MPEG-related products, but seemingly none in graphics except through acquisition of Active Design. The latter company was development stage and brought technology, but not track record or customer relationships. It will be an uphill sale for SD to get their chip onto someone's board. It inherently involves a significant gamble by the customer.
2. Looking at SD home pages, it announced in July a prior 2D card, the REALmagic64/GX which they market with a strategy of "try it, it's pin-compatible with the S3 Trio, you'll like it, and it's cheaper". Does anyone know if there have been any design wins with this? SD seems to do press releases on a per-win basis, reasonably enough for a small company, and there are no releases for this chipset.
3. Same issue with the 3D card - There don't seem to be any boards using this chip. The new card uses the same marketing strategy, seemingly. Pin compatible with S3 Virge, but quantity price of $25 to S3's $28-30. If this fundamental strategy is sound, why have there been no design wins? Please correct me if there are boards around that I simply don't know about. And if I'm mischaracterizing the strategy, let me know.
4. One might argue that SD has missed the initial 3D wave - all board mfgrs. are out, the popular reviews are out (e.g., PCMag review of december didn't include SD), the customer perceptions are formed, the holiday season is practically over, and SD does not seem to be there.
Can SD make it in subsequent waves with no 2D/3D customer relationships to build on and no demonstrated ability to technologically leapfrog the competition? I assume they have talented engineers, but if the strategy is "pin-compatible with the last generation" in a rapidly evolving market, this also places additional risk on their prospective customers - by choosing SD, will I be able to keep up in the graphics feature wars?
5. If there's trouble on one front, can they handle trouble on the other? Specifically, it seems to me that MPEG has or is quickly reaching commodity status. I personally can choose between half a dozen software MPEG players that I get free off the net, and if someday, I get hardware MPEG acceleration of my video card, then I'll probably do so without even intentionally buying it - it's just another checkbox for graphics designers these days. I think most consumers will get video playback from some thingie on their new computer and not really know or care what makes it really work. Is SD at risk of seeing their market for MPEG decline while they have a still-unproven future in graphics?
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All these negative vibes notwithstanding, SD has, in fact, doubled quarterly revenues on year-on-year basis and moved from significant losses to profits. They do have design wins in notebooks, and that's a solid plus in a growing market. The Active Design merger is behind them (I trust the engineers stayed?). The new products create a nice perception as well, if not reality, and most investors seem focused on the former these days ;) It's also possible that, in a year, 3D graphics will simply be the hohum regular video stuff and then a clone-for-cheaper strategy might work. If SD has some wizardry up their sleave for significantly advancing graphics technology on their newly aquired base, I'd love to hear that, too. |
