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

To: R Stevens who wrote (4727)	6/25/1998 8:38:00 PM
From: Frank Sheridan	Respond to of 16960

The point that the investors are missing is that if TDFX becomes the de facto standard for 3-D acceleration then their architecture will be what gets designed into the next generation of CPUs. Of course, Intel REALLY doesn't want this to happen. I see one of two outcomes here: 1. TDFX becomes so dominant that consumers simply refuse to buy a computer without TDFX brand acceleration in it. 2. Intel gets the performance of their i740 up to a point that the marketplace decides that it doesn't care about who provides the acceleration as long as the machine can do it. The ONLY reason that I think TDFX has a chance to see outcome number 1 is because of the previous example of Creative Labs with their SoundBlaster design. Intel can build anything they want to, but the public demands SoundBlaster in their machines, and the software companies continue to support the SoundBlaster standard because they know that the marketplace expects it. If TDFX is the still the big technology and market leader by the end of this year then I think their long term chances are decent. As far as graphics acceleration being integrated onto CPU cores, yes, the name of the game is SOC (System On a Chip) - that means integrating EVERYTHING that is in a PC onto ONE chip. This means chipset, I/O support, Video output support, power supply management, and even graphics acceleration. However, no one company really has the expertise for doing all of these components by themselves, and a direct result of that fact is the growing IP (Intellectual Property) movement - IP being "parts" of the die that are supplied by someone other than the company developing the chip in question. (Think back to the old days of CPU's being a card in a mainframe. The first CPU cards consisted of parts that were all made by IBM. Eventually IBM decided that it made more sense to buy parts from outside vendors than to develop each and every part themselves - IP is a continuation of the same theme.) It seems to me that if TDFX is really successful then eventually they will manufacture less and less silicon, and more of the revenues will come from other companies paying them fees for the right to use TDFX technology on their chips. Of course, IP is not exactly something that the average fund manager knows much about. Regards.