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

To: Obewon who wrote (8409)	10/17/1998 3:21:00 AM
From: Patrick Grinsell	Read Replies (1) \| Respond to of 16960

Obewon, I've heard all those arguments before, but one of the messages actually stated that they believed customer orders were higher than what was listed. In addition, I went to Frys in Sacramento to get a Banshee today. Where there was a whole Banshee section there is now nothing available. I did see best data VoodooII's for $149 with a $30 rebate. Diamond boards are selling at were the highest price there and I only saw a couple left. Plenty of TNT to go around. I think our issue with Diamond stems from the fact that they aren't willing to compete at lower price levels. Pat

To: Obewon who wrote (8409)	10/17/1998 9:01:00 AM
From: Michael G. Potter	Respond to of 16960

I'm the one who brought up _The Fifth Discipline_ and the beer game example. Although it is a good example of why boom/bust cycles happen (like the Voodoo2 chipset), the real message in the example is to understand the system you operate in. If 3dfx is monitoring true retail sell-through and they are taking into account the current "hot new product" stage, they can control the amount of inventory that goes into the channel. The distributors also can help to influence this. The easiest way is to be as open as possible about the extent of allocation needed and the rules for allocation. Communication with your customers is key at this point, especally the boardmakers because they'll be feeling the brunt of any clamoring for supply. Retail stores need to have product on their shelves. Empty shelves mean lost sales, especially if someone else has product. Empty shelves are ok to a certain extent because scarcity can increase demand (think of cabbage patch dolls and ticle me elmos), but a computer upgrade like Banshee has too many substitutes (at least on viable substitute is a voodoo2 board which helps 3dfx some more). I think that it will be a very good Christmas season for 3dfx, especially if they can get enough product into the retail channels. The has a 13 week or so cycle time from order to shipment and then the boardmakers need time to make the boards and ship them. I'm expecting amuch more front-ended quarter this time as the heaviest demand will be starting next month and ontinue all though December. The heavy demand period is coming soon. Those OEM announcements are very important if we want OEM sales to contribute via Xmas sales. Michael