Strong in OEM Channel, S3 and NVIDIA Face Retail Challenge
Story Filed: Thursday, May 12, 1999 11:45 PM EST
May. 12, 1999 (MULTIMEDIA WEEK, Vol. 8, No. 18 via COMTEX) -- While
game-focused 3D chip makers S3 [SIII] and NVIDIA [NVDA] face problems
getting consumers to recognize their brands at retail, competitor 3dfx
Interactive needs to ensure success at the OEM level to remain
a dominant player.
3dfx will be "wildly successful" at retail thanks to a strong
marketing campaign, says analyst Bob McQuillan of market research
company Jon Peddie Associates. "I think it's going to create a good
mindshare for 3dfx," he tells mmWeek sister publication mmWire. But
the company needs to obtain more OEM wins -an area in which its
competitors are still strong.
S3 has an established track record with OEMs, McQuillan says. Last
week, the company regained the OEM support of Compaq [CPQ] - once S3's
largest customer - when the PC manufacturer announced it would support
S3's Savage4 chipset. (Two years ago, Compaq dropped S3 in favor of
ATI Technologies [ATYT].) Although Compaq won't say which PCs will use
Savage4 chips until it ships its next-gen systems next month, the
announcement of the Compaq deal is significant in itself, an S3
official tells mmWire. "We won them back."
Similarly, NVIDIA last month inked deals with PC giants Hewlett
Packard [HWP], Compaq, Dell [DELL], Gateway [GTW], Micron [MUEI]
(which also uses S3's Savage4 chip), NEC and CompUSA to include its
Riva TNT 3D chip with select Pentium III systems.
OEM announcements from 3dfx have so far been sparse (it won STB-
related OEM deals with Packard Bell, NEC Direct and UK PC maker
Evesham Micro). However, the company expects big things from the OEM
channel. Last year, only 10% of 3dfx sales came from the OEM side, SVP
of Worldwide Marketing Michael Howse tells mmWire. He expects that to
increase to 40%-50% this year, now that the company's cards support 2D
as well as 3D, giving OEMs the low-cost card they need. (The cards
have high 2D benchmark ratings, he notes.)
At retail, NVIDIA and S3 have filled the void that 3dfx created when
it moved to acquire STB Systems [STBI] and bring board development
in-house. Diamond Multimedia [DIMD] and Creative Technology [CREAF]
accounted for 35% and 25% of 3dfx's business, respectively, last
December.
In order to get their brand names recognized, S3 and NVIDIA need to
work with Diamond and Creative, McQuillan says. This could prove
difficult, as 3dfx found out when it worked with the board makers:
While Diamond and Creative's brands were emblazoned across their
packages, 3dfx was the "jealous husband," with its inconspicuous logo
in the corner of the box, 3dfx CEO Greg Ballard told us last December.
Alternatively, S3 and NVIDIA could choose to embrace the 3dfx ethos,
and produce cards themselves. It's certainly possible, McQuillan says.
"We suspect that there's more of these types of things to happen," he
says. (Jon Peddie Associates, Bob McQuillan, 510/481- 7668; 3dfx,
Michael Howse, 408/935-4400; S3, Paul Crossley, 408/588- 8664) -- Simon Price, editor, MultiMedia Wire
3D Chip Market Share*
Rank Company
1 ATI Technologies
2 S3
3 Matrox
4 Nvidia
5 Intel
6 3dfx
7 STMicroelectronics
8 Trident
9 Cirrus Logic
10 3Dlabs
Source: Jon Peddie Associates
*Market share ranking of 10 volume-leading 3D chip suppliers in Q4 98.
Top 5 Add-In Board Suppliers*
Rank Company
1 ATI
2 Matrox
3 Diamond
4 Creative Labs
5 STB
Source: Jon Peddie Associates
Copyright © 1999, Phillips Publishing International, all rights reserved. |
