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

To: Michael Linov who wrote (9581)	12/13/1998 11:40:00 PM
From: Patrick Grinsell	Read Replies (2) \| Respond to of 16960

Answers to questions from 3dfx (Scott Sellers)... I got a response today from Scott Sellers on my earlier questions. :-) First let me say thanks to Mr. Sellers for going out of his way to take the time to answer these. Here we go... 1) Is Voodoo3 pin-compatible with Banshee? No. Voodoo3 is manufactured in a .25 micron process, while Banshee is manufactured in a .35 micron process, making it extremely difficult, if not impossible to make them pin compatible. On top of that, Voodoo3 has a new dedicated TV/LCD digital output port and support for AGP 2x which were not present on Banshee, again posing problems for pin-compatibility. 2) What was the projected cost and time delay for adding 32 bit external rendering for Voodoo3? We have a thorough review process which looks at proposed new features and the length of time (and engineering resources) for future products. All we can say is that the length of time to add 32-bit rendering would have made a Comdex announcement and public showing extraordinarily difficult and very risky schedule-wise. 3) Greg Ballard once said in an interview with the Motley Fool that the main reason the the roadmap isn't public is that this hurts retail sales. If this is true and Voodoo3 was a minimum of 5 months away (2Q99), why are you announcing it? Has 3dfx changed their position about the open roadmap? I think you'll find the announcement of Voodoo3 at Comdex very consistent with the timing of our announcements historically. We like to announce new products at high profile tradeshows, and, just as we did with the original Voodoo Graphics and with Voodoo2, Comdex has always been a show which we believe is very important to announce exciting new products. If you recall, Voodoo2 was announced in Comdex 97 and did not ship for several months after. The strategy to announce Voodoo3 before it was ready to ship in production is very similar to the Voodoo2 strategy. We do not see this as a change in the way we communicate our roadmap whatsoever. 4) Since you appear to be breaking your own rules (see #3), when can we expect to see Rampage and what are its specifications? The latest product 3Dfx has announced is Voodoo3, and its specifications are now publicly available. 5) Does it look like the Voodoo2 inventory will be used this quarter? If so, will you do another production run at TSMC to supply 1Q99? We cannot disclose projected inventory levels or future production plans at this time for Voodoo2, or any other product for that matter. 6) Do you plan to make any other new product announcements soon? We believe 3Dfx has the strongest future roadmap of anyone in the mainstream graphics business, and certainly we will be announcing new products when the time is appropriate. 7) What would you classify are OEMs biggest objections to Banshee and Voodoo3? As evidenced by the fact that Banshee in its first quarter of volume shipments has exceeded 1M units is testament to how strong the product really is. And for a company like Gateway to select Banshee over all other graphics parts for high volume SKUs really proves that OEMs believe the product is best-of-class. And, as we've said numerous times before, there are more OEM announcements to come which prove the continued momentum that Banshee is building in the OEM markets. Clearly, AGP 2x was a feature that we had to sell around for Banshee, but we have been very successful doing so. This issue has, obviously, been addressed with the introduction of Voodoo3. 8) Has there been any progress on the lawsuit with Nvidia? We cannot comment on the pending litigation with nvidia. 9) Is ATI infringing on your multitexturing patent too? Are they paying royalties? We cannot comment on the issue of whether ATI, or any other competitor for that matter, infringes on 3Dfx intellectual property. 10) What will be your biggest roadblocks in growing your business in 1999? Successful penetration into the OEM segment is very difficult and resource intensive. Our challenges include putting in additional staff, processes, and procedures in order to not only satisfy, but excel, in the support requirements of our system OEM customers. And doing this while not defocusing the engineering team from creating exciting new flagship retail and OEM products is a challenge. 11) Although the Diamond merger seems to have failed are you still keeping your options open for another IHV merger? If so who? We obviously cannot comment on potential mergers or acquisitions. 12) You have said that you plan on going in laptop, set-top, and hand held markets. Which laptops, which set-tops and which hand helds? If you can't give us these specifics, then how about a rough description of the types. A set-top can be anything from a cable converter to a game console. What is your vision? The overall 3Dfx vision is to become the standard for entertainment 3D graphics, spanning multiple markets. Clearly, there are numerous exciting opportunities present in the mobile, set-top, and hand-held markets, and we are aggressively investigating possibilities in those segments. 13) How do you justify the enormous operating expenses? Nvidia, for example, has just a fraction of what you spend as a percentage of sales but doesn't seem to be behind in either technology or marketing. Do you expect sales to catch up with expenses or have expenses just been unusually high recently? >From the beginning, and as we constantly communicate, the 3Dfx vision is based around much more than just technology. We believe that companies that focus exclusively on technology have not built sustainable business models that can survive the always brutal and extraordinarily competitive graphics market. Why is it that the graphics market has shrunk from around 50-60 companies competing to a relatively small number in a very short period of time? It's because the focus was only on the technology. We believe that focusing on building a company with strong ties to the content and building a strong brand name is absolutely fundamental to long-term success. Obviously, focusing not only on technology, but also heavily on content and brand is going to be more expensive. But we are confident that doing so will create a company that will be around for a long, long time to come. 14) Will future products use SLI? If not, is there another form of parallel processing you see as doable? Obviously we continue to investigate techniques and algorithms which drive graphics performance higher and higher. 15) What non-traditional rendering technologies do you believe to be the most viable (i.e. voxels)? See answer to question #14.... -------------[EOM]---------------- Pat "Waiting for my 3dfx Palm III" Grinsell