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

To: Sverre Schriwer who wrote (1059)	12/15/1997 2:56:00 AM
From: Sverre Schriwer	Read Replies (1) \| Respond to of 16960

A very interesting benchmark test was posted by id Softwares Brian Hook. He is an ex-3Dfx employee, currently working at id. I beleive the published results are more than enough to resolve any doubts as to the technological leadership of 3Dfx, as well as their ability to maintain it at least for the next 6-12 months. The full text can be found at: finger.planetquake.com Some quotes: "Every now and then a beast walks the landscape and devours all within its path, knowing no natural enemy. These are the things of legend: Michael Jordan, Walter Payton, the great white shark, early Mike Tyson, and... 3DFX, ca. 1997" "Let there be no doubt, there is no new sheriff in town, the current one just got a lot meaner. Sure, the Voodoo2 4/4/4 SLI board isn't going to be that common -- but if you can afford one, you'll have performance at 1024x768 at almost DOUBLE the nearest 3Dfx competitor's performance at 512x384." On the up side, one of the things to bear in mind is that these rave reviews are posted by one of the programmers behind Quake II. John Carmack & the rest of the id team seems to share the positive view of 3Dfx. Most game developers really like 3Dfx for the obvious reason that they want to "go where no man has gone before" in the next game - which calls for ever better performance from the hardware. On the down side the only cloud on the horizon is the question how well 3Dfx management is able to exploit the market leadership they have attained. This christmas they rule, of that there is no question. Earnings for the current and upcoming Q will be great - just look at the shelves in your local computer games store - but so far the company seems to lack major OEM deals or other known strategy aimed at turning their tech advantage to greenbacks for the years to come. Holding this stock until the X-mas sales show in the next Q is a no-brainer. At the moment there is simply no competition. If you play the latest games on your PC you need a 3D card, and buying one based on the Voodoo I chipset is the obvious choice. The long term problem is not so much performace competition from the likes of RIVA and Intel, but the lack of proprietary standards and OEM deals. When 3Dfx is compared to IOM, the point is often overlooked that IOM holds patentable, proprietary rights to their design, which assured them a comfortable living once they acheived their market leadership. 3Dfx does not. OpenGL is just that - open. 3Dfxs GLIDE is to my knowledge a proprietary subset, but most future games if not all will support the new openGL and D3D. The threat to long term growth is future inclusion of 3D acceleration as a standard component in new PCs, and this will happen soon. If there's a decent 3D chip in your new computer only the hard core gamers are likely to fork out a premium to replace it with Voodoo II. This is a wholly different ball game from moving from playing Quake II or Tomb Raider II without 3D acceleration and buying a 3Dfx card. I don't know why 3Dfx haven't struck a deal with Intel, Compaq, Dell or any other major players. I also do not know why they spend so much effort on the Banshee 2D/3D chip instead of teaming up with Matrox, who are market leaders in 2D and suck at 3D. There may be very good reasons for all this, but what has me worried is that 3Dfx management might belive that tech leadership is all they need. It is not. 3Dfx must somehow turn their advantage into assured long time financial growth. These raving are just my 2 cents... Always do your own DD in stocks, as you do with whiskey, women and TV.