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

To: Michael G. Potter who wrote (10910)	2/28/1999 11:08:00 AM
From: Joe C.	Read Replies (1) \| Respond to of 16960

Flat Panel Displays I haven't seen anything written on TDFX's LCDfx chip. Does anyone know whether this chip has any unique features, proprietary technology, performance advantges, etc. I see Flat Panel Displays as the next hot upgrade as soon as prices come down some. They look great on the desk, take up much less space and can be easily moved around. In essence, their a slick looking toy that people will want to keep up with the Jones's. Yet, not one review has mentioned the chip in any detail. I beleive the boards included it. Am I missing somthing. Joe C.

To: Michael G. Potter who wrote (10910)	2/28/1999 10:43:00 PM
From: Marketeer	Read Replies (2) \| Respond to of 16960

3Dfx in Transition Focusing on huge OEM, that's what the STB purchase is about. 3Dfx wants OEM contracts that provide steady and growing streams of revenues and earnings. Voodoo1 and Voodoo2 as expensive retail add-on parts made them tons of cash, but sales were very seasonal and driven in large part by high-end gamers. Only a good 2D/3D part stood a chance of winning those coveted OEM contracts and allow 3Dfx to go corporate mainstream. Hence, they developed the Banshee. But 3Dfx failed to win any significant OEM contract with it. Why? Maybe, lack of OEM relationships and available competitive offerings (Riva 128, TNT and Rage Pro). Combining STB's sales and marketing staff with Voodoo3, 3Dfx hopes to get a leg up in the next OEM race (Summer 1999). Now, how does OEM choose their partner? Besides the relationship (ie. trust and proven ability to deliver), OEM has a checklist and price consideration. What is missing from Voodoo3 that OEM may look for. You guessed it - 32bit 3D rendering and display, DVD decoding (ie. motion compensation), and true AGP support. How important are they? Depends on the PC models and their target market segment. Low end (less than $1000) - AGP, 32bit rendering and display. Mid range ($1000 to $1500) - AGP, 32bit rendering and display. High end ($1500+) - AGP, 32bit, and DVD decoding, plus everything else their marketeers care to point out. Is the OEM stupid? Absolutely not. Can 3Dfx easily explain away the lack of true 32bit 3D rendering and AGP support? No, especially now that they know they have 3Dfx by the balls. In the coming months, 3Dfx/STB is in an unenviable position. 3Dfx will lose two of their largest customers (Diamond, Creative), and STB will lose a major supplier (NVidia). Their revenue base is in jeopardy! Retail end-users may or may not come through for Voodoo3 (evidence of this can be found all over the net). Knowing this, the OEMs have huge bargaining chips against 3Dfx. Remember, there is no shortage of qualified competitors. At the heart of the OEM mentality, they think the public is stupid. To some degree they may be right. That's why they focus on benchmark results and checklist features. They don't really care about offering the best (gaming) performance, as long as the part performs well. That's why the ATI Rage Pro continues to dominate OEM marketshare. It's a decent part and it's damn cheap! In 3Q99, Savage 4 (with texture compression and DVD), TNT, TNT2, and Rage 128 (with good DVD decoding) will be giving Voodoo3 a lot of problems in the OEM space at both the low-end and high-end segments. They are all very capable yet cost-effective. Price, marketability, and performance are three major factors the OEM will look at. On these basis, I believe Voodoo3 can only win some contracts if 3Dfx drops their pants (pricewise). The graphics semiconductor industry is a tough place. There is no mechanism to establish unassailable market position. It's always my next chip is better than yours. That's why no one company can remain at the top for too long if it doesn't stay paranoid and adaptive. For this round, 3Dfx has missed the mark with Voodoo3. Will it survive? Sure. It has hoards of cash reserves. Will I invest in it? No. Actually, I won't take position (long or short) in any highly competitive, cyclical, commodity industry like the graphics semiconductors. Not anymore anyway :) I prefer the highly volatile, bubbly Internet stocks instead. For me, 3Dfx and the crowd are simply fun to watch and discuss. Good luck to all. Jeff Lins, good to see that you are still heavily discussing 3Dfx. Our recommendations to make you a permanent member last year proved fruitful. What else are you into these days beside TDFX? Marketeer