Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: Dave B who wrote (40542)	4/21/2000 12:48:00 AM
From: pompsander	Respond to of 93625

<Anyone have any better assumptions?> Actually,Dave, I followed the same logic trail as you did when I read the Dolphin news. I came to much the same conclusion. The entire argument that the royalties will make any product noncompetitive is silly. Here's why: 1. The size of any royalty is a small, small portion of the costs of production, shipping, assembly, promotion, etc. You make this point admirably, far better than I could. 2. However, what cannot be lost in this entire argument is that Rambus, and any firm dependent on licensing fees for its very existance, is not going to kill the goose that lays the golden egg by pricing itself out of GENUINELY competitive product contest. I think we are all agreed that people will still pay for performance...the question is how much they will pay for how much better performance. Putting aside for a moment the eternal question of whether RDRAM is better than SDRAM or DDRDRAM, when it comes down to Rambus achieving a product win against a competitive technology which is identical in performance (of course, nothing in the real world is exactly identical, but humor me) there are a myriad ways of managing the royalty/licensing/fee equation to both keep the bottom line cost to the OEM within acceptable boundries and to not destroy Rambus' royalty formula scheme under which other OEMs in the industry pay. Even within "most favored nation" clauses there are ways to work this kind of stuff out. I know, I do it in my business all the time. It is like the movie industry bottom line....no film every makes a profit, even Titanic. Numbers are your friends; you can make them work for you or against you....but you never let them beat you. 3. All of which tells me that either Rambus management is a bunch of dopes, throwing away legitimate business opportunites for a few pennies in reallocated royalty payments or, more likely, any product win for a non-Rambus solution is based on decisions other than royalties. Maybe these are very good technological reasons, I don't know. But, the "we don't have to pay royalties, so it will be cheaper" argument is ridiculous. 4. By the way, somewhere lost in all those arguments is the fact that license-holders get to benefit from the ongoing work of Rambus'staff and IP achievements. That is one of the benefits of holding the license. How will the future enhancements to DDR-II be developed and passed through? By NEC? Will they have an incentive to spend all that R and D on it, with no royalties coming back. Heck, they just created a commodity. Pomp