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

To: Patrick Grinsell who wrote (5987)	8/4/1998 3:53:00 PM
From: Simon Cardinale	Read Replies (4) \| Respond to of 16960

Best to let others make 3Dfx cards Many people have suggested that 3Dfx buy STB or someone so they could increase their profits. What most ignore is that having others manufacture the cards has some important benefits. 1) If one company's product is poor, another's might be better. People/reviewers will measure 3Dfx by the best of many board manufacturer's products. 2) Board manufacturers won't slam 3Dfx too hard when they come out with a competitor (like TNT) because they know they'll be slitting their own throats down the line. This is especially important in 3Dfx's position, since they're the market leader and the target of most snipping (phrases like "Voodoo-killer" have entered the gaming industry's vocabulary, and may be around after the Voodoo line is gone.) 3) 3Dfx only has a few customers, where board manufacturers have millions. Their marketing can be very targeted while board manufacturers take care of making the boxes pretty and getting the right shelf space at CompUSA. 4) By binding their own success to the success of many other companies they increase the acceptance of their product in the computer industry. 5) They can piggie-back on the success of companies that have fans who don't know what chipset was in their last video card, but know it was a Diamond and that they liked it. 6) They benefit from the experimentation of companies (like Wicked3D bundling with H3D glasses) without suffering from the failures. More experimentation means faster evolution. 7) Shelf space, shelf space, shelf space. CompUSA gives space to an armada of Voodoo2 boards which it wouldn't give to any one board manufacturer without serious price concessions. 8) They have better uses for their cash than buying STB. 9) They have better uses for their time. Buying a company would be distracting at a time when they need to be focused on keeping ahead of their competitors. 10) System OEMs like Compaq will be more comfortable buying boards from one of many suppliers. They'll feel they have control since they could always drop one board producer and change to another. Meanwhile 3Dfx can sit back and relax, not caring who sells. Basically they're doing so well under the current model (except for the stock price, but manufacturing boards wouldn't solve that) they shouldn't even consider changing unless their market dominance becomes overwhelming. opx