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To: Tenchusatsu who wrote (68562)	11/14/1998 4:53:00 PM
From: John Koligman	Read Replies (2) \| Respond to of 186894

Tenchusatsu - Here is another view on the history of the 'bus tussle'... John To: Richie (36549 ) From: rudedog Saturday, Nov 14 1998 9:43AM ET Reply # of 36577 Richie - The NGIO bus architecture sounded like it was for server applications and not desktop. NGIO was an attempt by Intel to retread its I2O initiative, sell i960 processors, and keep others from getting any say in I/O architecture which would diminish Intel's ability to drive its products. Intel first came up against CPQ's strength in this area in 1996 when CPQ and MSFT proposed the VI architecture, which is based on the Tandem SAN architecture. When Intel realized that CPQ and MSFT had the backing of most of the industry, including HP, IBM, even Sun and Novell, they decided that it was better to be in the boat than out and proposed a 3-way 'design committee' of CPQ, MSFT and Intel to manage the process. They then attempted to subvert the process by watering down the spec so that their buddies from giganet could be first to market, and so that there would be some intersection of VI and the I2O technologies. CPQ responded by putting together PCI-X, which extended current technology for a couple of years with innovative design extensions, then got IBM and HP to join in. Intel responded with a stronger push on NGIO, which was also not a new architecture. They thought they could 'embrace and extend' to get back in control of the standards. But CPQ had only played a few of their cards. The real work with IBM and HP was the proposal for a switch-based architecture which is as far beyond PCI as PCI was beyond the original IBM PC ISA bus. This architecture contains technology and design techniques which draw on the most advanced concepts at Tandem, Digital, IBM and HP. Intel was caught flat-footed. IMO NGIO will either never see the light of day, or will become Intel's name for their version of the CPQ-IBM-HP standard. The desktop market may eventually be affected by this but frankly, there is no I/O bottleneck on desktops with current PCI technology, let alone with the 8X boost that PCI-X will give. Workstations are another story - they need the bandwidth. So I see this as a split off which creates a low-cost architecture for desktops, which will continue to drop in price with no loss in performance as the components become more standard, and a higher cost but much higher performance architecture for workstations and servers. This is great news for CPQ which will be able to create servers and workstations which have much greater capability than today's models, and bad news for Dell's high end, which is largely dependent on Intel for design assistance. And of course the low end desktop business will continue the trend to lower ASPs, and at the moment CPQ seems to be one of the only companies which can make decent margins in that space. The handwriting is on the wall there - Jim Kelley and others have been saying for a year that CPQ was just dumping product to achieve the $799 and $699 price points, but those turned out to be the big money-makers for CPQ with better than 20% margin contribution. As CPQ brings out full-featured desktops at under $1000 and good starter systems at under $500, and does it on margins that are with in a point or 2 of Dell's overall corporate margins, Dell will be squeezed on the low end (where the BTO model does not have any advantage) and on the high end (where they will not be able to use Intel engineering to compete). Now that I look at this analysis, I'm thinking that this may be a good time to start thinking about a different investment strategy for the rudedog... CPQ seems to have most of the pieces in place for a great run.