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

To: David R. Parker who wrote (7718)	9/28/1998 10:07:00 AM
From: Michael G. Potter	Read Replies (1) \| Respond to of 16960

Looks like these are options only - add if you want. Matrox has a very good name for business users and it would make sense that Compaq would want to allow them to buy Matrox if they want. Michael

To: David R. Parker who wrote (7718)	9/28/1998 10:56:00 PM
From: Michael G. Potter	Read Replies (3) \| Respond to of 16960

OEM, OEM, where's the OEM? My 3dfx “model” – good brand name and recognition as a high-end, gamers company. Extensive software base that only runs on their chipset or runs best on their chipset. Able to transition from a niche, upgrade –based company (retail with all the seasonality attached) to an OEM supplier with steady earning boosted by high-end retail sales. What worries me about 3dfx? My largest worry is will there be an OEM announcement for Banshee? If 3dfx does not get a design win on a major OEM, it will be very difficult for them to make money with their current products and it will come down to their next generation. When I say major, I mean Dell, Compaq, Gateway, HP, or IBM. I would expect that it would be on the lower to mid-level products that they make. The TNT chipset is the high-end consumer 2d/3d solution right now, so I would expect it to be the choice for PII-400 and higher, maybe for most PII systems in general. I would expect the Banshee to be on Celeron and AMD computers (home market). The OEM's are now making their final choices for their Xmas models (many are probably already locked in). There has to be announcements soon otherwise I'll start severely doubting the viability of 3dfx. Banshee is now shipping in volume so the time is ripe to announce (OEM's will not announce until they have product to ship). It looks like Dell is sticking with nVidia. That doesn't surprise me at all as they've been using the Riva chipset for quite a while and the TNT chipset is a logical step. Add in the fact that STB lent $3 million to nVidia and you can see why I didn't hold out much hope for Dell. The only place I think it is likely that the Banshee will gain a foothold here is the low-end that ATI cards now occupy. The STB conference call stated that they'd also be supplying the TNT chipset for Gateway for the G and GP series. No confirmation there yet, I'm waiting to see if Banshee will be an option on some of the lower-end machines. Gateway also would make sense for Banshee as they have a strong “home market” strategy. Since I've mentioned STB twice already, I guess that I should also mention that they said that there's an OEM win for Banshee as well, but they didn't name the OEM. After Dell, I listed Compaq. I would guess that they would put the Banshee in one of their Presario line computers. There was a news release a few weeks back on some “internet” PC's. These PC's had ATI chips in them. I remember reading a post a few weeks back where someone had seen a new display in Best Buy that allowed you to build your own Compaq. Banshee was one of the choices for video cards listed as the mid-range solution (with TNT being the high-end choice). I think that Compaq would fit the profile of a “typical” Banshee OEM in their home line, but (other than Diamond Monster II cards as an option), there isn't much past history here and their cheaper PC's tend to build the video card right into the motherboard. Next is Gateway. The currently include a Voodoo II / ATI combination with all their high-end machines. I expect that to end with the TNT chipset if STB is right from their conference call. However, the mid-range machines all have ATI or Riva128 (ZX) based video cards. It would make a great deal of sense for Banshee to be included here, especially if Gateway's Voodoo2 experience went well. STB supplied the V2 cards and it would make sense for this to be the Banshee win they were talking about in their conference call. Finally, HP and IBM both make lines for the home market. Both have been ATI customers. Since they both make AMD computers as well as Intel powered PC's and Banshee works better than TNT on AMD chips, I think that there is a chance here. The gaming / branding angle could really help as these PC's are sold in the retail market. Michael Next I'll try to write something on 3dfx's competition (I think ATI is the one to watch short-term)