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Technology Stocks : 3DFX

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To: Joe C. who wrote (11349)3/26/1999 11:06:00 AM
From: David Rosenthal  Read Replies (1) of 16960
 
Joe C.

I haven't seen many comments on this board questioning the cost and value of the ad campaign. I personally don't think it's a good idea. Here are three questions that need good answers:

1. Who is the target audience for the campaign?

2. What additional sales does TDFX expect to generate and why?

3. What is the cost of each additional sale?

IMO, there are three relevant markets. The computer purchaser, the upgrader and the hardcore gamer. The computer purchaser is mainly driven by price. Look at recent statistics for computer sales and you can see that the market is growing at the low-end. Are these price conscious purchasers really going to be convinced by expensive ads to demand TDFX as part of their $600 PC's? Will these ads help promote OEM wins when price and not performance is the driving force in the market?

The computer upgrade market (that are not hardcore gamers) has potential. However, current advertisements in computer magazines and information on the internet already support this market. Are expensive TV ads going to stimulate a surge of new upgrades?

The hardcore gaming market already knows the score.

If TDFX has done their homework and can answer the above three questions satisfactorily then maybe this is a good idea. I personally have my doubts.

Dave

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