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

To: Bilow who wrote (44924)	6/18/2000 11:57:00 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 93625

Carl, I am sorry I cannot respond to all the points you and Scumbria have made in the last few hours, so I'll summarize my "position" for both of you. The question of how much of the "total" SDRAM, DDR and RDRAM is based on how much IP is irrelevant to how much royalties are paid. The royalties is not on the proportional portion of IP involved but on the actual claims. To give you a simple example, if that windshield wiper patent that was mentioned mentioned earlier had a claim "32" "a vehicle having a windshield wiper according to claim 1...", the vehicle is the patented product (I should mention that the patent office may have not accepted such a claim for various reasons). It is "generally accepted that in drugs the total royalties rate on a given products (assuming different relevant IP) could go as high as 15%. In most other products it goes to as high as 7%. IBM used to license out a number of suites of patents and each suites added 1% to royalties to a cap of 5% paid to IBM. Thus 1% to 2% is far for excessive if other IP do not load the product with an additional royalties in excess of 3% to 6% (including "internal royalties for internal patents and cross licenses). As for the "importance" of the patents, without going into details (nor rendering any opinion as to patent strength and chances of withstanding the scrutiny of a challenge and attempts at invalidation), I believe that the principle of double data rate transfer (two bits per clock cycle) as well as "programable register to control and "unify") latency are absolutely critical to increasing bit rate transfer. As to the "perceived" problem of additional costs, I'll repeat what I said many times, the increase in SI real estate vs DDR or SDRAM, should not be greater than 15%, thus the eventual cost should not be greater either. As to why pay more if let say, DDR or SDRAM can provide similar performance at lower cost (today). That is a more difficult question, but I believe you will find the answer in INTC's long range strategy (paraphrased as I understand it): "INTC will make sure that the speed bottle neck in any computing platform will always be the CPU (or other product we, INTEL, sell) so we can charge large premium for additional performance without that performance advantage being negated by other speed bottle necks in the system. This philosophy does not stop at 1 GHz, and scumbria noted few days back, RMBS is currently the only viable solution above 2GHZ. Well, if Scumbria is right, we (INTC) better make sure that the infrastructure is in place for the time we come up with our 2GHZ systems, otherwise, people will not pay the premium, since the DRAM communication speed will slow down our future processor, thus no premium for us. That maxim is worth a good $5B per year to INTC and is worth investing the $1 B they have in attempting to coerce the industry to adopt the new standard bearer. As for engineering around, Scumbria in 44942, clearly state that as they are (if not challenged and said challenge is successful) there is no trivial way around these patents (by the way, that is not exactly correct either, I can see a future high speed optical bus that will not require the exacting protocol promulgated by RMBS right now, but that is another story). Finally, just as it was quite evident last week before Friday that something is known to a select group of investors supporting the stock above the $50 area all week, if some of these tenets prove wrong, some "knowledgable" investors will now ahead of us, and we will see stubborn selling at well defined price range indicating that the tide might, once more (what a yo-yo this one has been, I for one missed my GTC at $122 by $11 or so, I must have forgotten some ingredients in those turnips' horse manure) tun against the bulls. That could be just due to perceived over valuation, general market malaise, tendencies to pay less for far in the future earnings, and other acts of god ot Hitachi and the Dramurai that are not yet known to us lowly mushrooms (kept in the dark and fed bull shit). Zeev