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Technology Stocks : 3DFX -- Ignore unavailable to you. Want to Upgrade?

To: Greg S. who wrote (13419)	6/23/1999 5:27:00 PM
From: Sun Tzu	Read Replies (3) \| Respond to of 16960

>> Or they'll exit the market. Twelve or more boardmakers competing over a single chip that will make or break their board sales - not gonna happen if you ask me. I agree. And when that happens, nvidia will be taken over, or will pick who she'll dance with. >> Did all of these boardmakers make boards exclusively for 3dfx chips? No, not exclusively. But their choices are narrowing down fast. Ignoring vertical graphics companies like ATI and Matrox, when it came to PC graphics, you went with Intel if you wanted low-end, S3 if you wanted medium range, and Voodoo and TNT if you wanted high end. There were also some cheap pure 2D chips that you could buy the whole board for $20. The consolidation that is happening is what was discussed last year. The very low end graphics chips are mostly doomed; they don't have the resources to develop 3D chips, and they cannot compete with Intel on the low end. The next two levels are also now vertical companies. So the only ones left for the board makers to buy from (if they don't want to quit) is nVidia and Intel. These are not competing chips, but Voodoo, and to a lesser degree Savage, were competing with nvidia for the budget from the board makers. Now that competition is gone. It does not matter how much better or worse nvidia is than 3dfx; if you are a board maker, you don't have much of a choice. It also doesn't matter if how many of these smaller companies go under (chip maker or board maker). What matters is the total number of graphics cards shipped and the number of available graphics chips. Consolidation means that 20% of the industry eats the pie, and the other 80% eat dust. So unless number nine and 3DLabs get together and pull a rabbit out of their hat, the industry is left to ATI, Matrox (maybe -- maybe not), Intel, S3, 3dfx, and nVidia (am I missing anyone?). This is a huge consolidation compare to the 40+ graphics chips that you could buy just 5 years ago. Only Intel and nVidia will supply chips to the board makers, so draw yourown conclusions. This battle is done and over with. The next battle will be the convergence of desktop graphics and workstation graphics. My money says 3Dlabs, E&S, Intergraph, and even SGI, will lose it to the PC guys (perhaps one of them will survive as a graphics company, but not in its current shape and form). Pat -- does this answer your question? ST