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Technology Stocks : IDTI - an IC Play on Growth Markets -- Ignore unavailable to you. Want to Upgrade?

To: BigBull who wrote (7592)	3/29/1998 1:24:00 PM
From: Rob S.	Read Replies (2) \| Respond to of 11555

I think it will be a while before IBM would buy IDTI. Why buy them now? The production of X86 uPs has little to do with the overall success of IBM. They get their cake now - they sell manufacturing capacity and new fabrication technologies to several competitors at about 1/3 more than cost. They share distribution rights of parts for AMD and Cyrix (maybe IDTI also) and get lower cost relative to their competitors. IBM can let three scrappy competitors duke it out for technological viability and nitch market products. And they still get all the parts they need from Intel because of their position and history in the market and technologies. What better position could you ask for? What would buying a company give them that they don't already have? Will that buy them the opportunity to determine market direction or enhance their market position? I doubt buying IDTI will give IBM much leverage in determining market direction anytime in the next three to five years, if ever. IBM has failed in the past to stear the market - remember micro-channel? Or the early PC and PC Junior fumbling when they had the potential for protecting the bus and system architectures similar to what Intel is now doing with PII/slot 1? IDTI would add little to IBMs ability to change the direction of systems architecture and the dominance of Intel and Microsoft as stadards setters. The next big gambit for the computer industry and a direct challenge to IBM is Intel's Merced product family that will be introduced by early next year. This product will deliver much higher performance levels than any X86 product is possible of and is designed "from the floor up" to be used in distributed multi-processsor systems. This product will more determine IBMs fate than the X86 market because it will penetrate all but the highest end of the computer market and will revamp the server and mainframe markets in which IBM makes most of their profits. There are some interesting things that could (should) develop out of the relationship between IDT and IBM but I don't think IBM would buy IDT or any other uP company. The majority of profits come form the systems, software and service parts of their business, not from the chip side.