OMG... Some of you people here are so incredibly short sited, it is disturbing.
1) This is the best possible thing for the consumer. Lets face it, after the Voodoo4/5 flopped big time almost everyone saw this coming. Nvidia now has the assets to bring to market technologies that would have never seen the light of day under 3dfx. Consolidation is ALWAYS healthy for the consumer. Matrox and ATI are both still out there and they have been the only real competition to Nvidia for several months now, as pointed out by pHaestus. I wouldn't be surprised to see ATI and Matrox anounce some kind of joint venture in the near future.
2) There is absolutely no threat of Nvidia "becoming another Microsoft." The 3D gaming/graphics industry is not nearly large enough to promote consolidation much farther beyond this move (except of course for an ATI/Matrox combo).
3) This crap about Microsoft "lacking the competition to ensure quality" is totally absurd. Microsoft has not realeased a crap product in a very long time. Yes, there are bugs in every new release, but show me a single product that was released in its final version. The fact is that alpha and beta testing roots out lots of bugs, but its not realisitc to expect some of them to not come up until the product is released into the real world where idiots are running P60s with 16MB RAM and are wondering why Win2k advanced server doesn't run on their box.
Bottom line is this deal is great for the industry since it provides all kinds of new paths for innovation. There is little to no risk of sky rocketing prices since, as we mentioned, ATI and Matrox are still around. You can all relax and stop cradling your video cards.
3DFX Going Down?
splitfire, you must not have run windows ME 
it's a bug with a great marketing drive.
ATI is still king in total sales. OEM is the key to this. OEM's ONLY buy what's cheap and reliable... IE BULK. Nvidia needs to invade that space to continue to gain ground, which they even seem to be loosing to ATI's Radeon line of cards.
Oh well, hopefully there won't be the fighting between the two companies now, and we'll see a chipset with all the features of voodoo's and Nvidia's products
it's a bug with a great marketing drive.ATI is still king in total sales. OEM is the key to this. OEM's ONLY buy what's cheap and reliable... IE BULK. Nvidia needs to invade that space to continue to gain ground, which they even seem to be loosing to ATI's Radeon line of cards.
Oh well, hopefully there won't be the fighting between the two companies now, and we'll see a chipset with all the features of voodoo's and Nvidia's products
Splitfire, you seem to know a lot about computers but next to nothing about the computer industry. I've only been working in the industry for 2 years now but in that time I have worked closely with Intel, National Semiconductor, Agilent, HP, Lucent, Infinium, Altera, IBM, Xilinx, and a host of others. I've seen first-hand how both internal/external testing is conducted. I spend most of my day doing systems testing. The first thing you need to realize is that there is no such thing as a perfect product in this industry. When we choose component vendors for our products we spend months qualifying their parts. Usually out of about 5 vendors we find a single one that meets or exceeds our standards. Even then we often find inherent design flaws, and will require that the vendor either make changes, or risk losing our business.
The second, and perhaps the most important point, is that engineering is driven by politics and money. It's not the way things should be, but it's the way things ARE. When design problems are discovered in a new product, it's not up to the design engineer to decide if it should get fixed or not. They report to higher management, who then must weigh the costs and potential dollar losses of fixing the bug. If it's critical, of course it will be fixed. But when a fix and re-spin sets the FCS date (first customer ship) back by 2 weeks or more, management views it as potential revenue losses (usually in the millions of dollars) and opens the door for your competition to be the first to market. What does this mean? It means that nearly everything ships with potential bugs. Whether or not the target market will notice these bugs also dictates if they get fixed. What's the point in prolonging the release of a new product when only 1 customer in 1,000,000 will discover the bug.
I agree with you that in terms of revenue, 3dfx has not been viewed as a serious threat to nVidia in a long time. However, the average consumer doesn't give a rats ass what the current market cap of either company is at. Just FYI 3dfx was worth about $100 million 1 week ago while at the same time nVidia was worth $2.5 billion. No comparison. However, most of the gaming community sees competition in terms of the technology, and their ability to make that technology readily available (that's why gamers don't use SGI workstations). 3dfx and nVidia have always held the forefront in competing, leading-edge technologies. Only with the release of the Radeon has ATI had a product worthy of deeming "leading-edge". In this case, consolidation is healthy for the merger of two technologies. But healthy for the consumer, I don't see how that's possible. nVidia now has access to current 3dfx patents. We may see a product or two from nVidia utilizing both technologies (which is good), but when that becomes obsolote, what then? They're not going to go digging into the archives of 3dfx patents for something new to try. It will already have been done. I'm really hoping to see the speed of nVidia graphics processors merge with the FSAA from 3dfx. But when that's been done and beaten to death, who will provide the next technology to make the R&D team at nVidia lay awake at night, sweating over how to make it better?
That leads me to my next and hopefully final point. The folks over at Microsoft don't have these same worries. Without any real competition, they have little motivation (besides pleasing the consumer) to make an outstanding product. They make outstanding GUI's on top of a POS operating system. Too many Windows users are brainwashed by the pretty graphics, ease of use, and convenience of the product to see what really lies beneath. And what does lie beneath? The whole friggin' OS! The interface is a miniscule fraction of the whole entity. I took 2 operating systems courses in college and worked 2 years ago as an intern for Borland software (now Inprise). I had to test our software on Windows, Linux, Solaris, UNIX, HP-UX, BSD, and AIX based systems. I've seen 'em all, played with 'em all, studied 'em all. I know what SHOULD be done in an operating system and what has/has not been done correctly in those previously mentioned. I assure you, Microsoft software engineers were either asleep or drunk when they taught the course on the difference between user and kernal modes. You DO NOT allow application software to make system calls in kernal mode where all system resources are available to f*ck up. If you walked into a college OS course and made the statement that Windows was a "high-quality" OS, you'd better pray that's it's April 1st so you have an excuse for making such a statement.
Please, all I'm asking here is that you don't judge the book by it's cover. Learn about operating systems, learn about what goes on underneath the shell/GUI, learn about shared memory vs. private memory, and forked processes, then ask yourself what's really happening when you see the BSOD? When the next Microsoft OS is released don't go celebrating because it looks prettier and makes it easier for you to share your phone line. Realize that an OS is perhaps the most complicated piece of software ever conceived. It is the result of hundreds of millions of lines of code. Code that has been re-cycled from the days of Win95 and NT without being re-tested. Code that has inherent design flaws and bugs. It would take Microsoft years to validate it and at least double that to re-write it. So they release it fully aware of the thousands of potential problems. There is far too much money at stake otherwise.
The second, and perhaps the most important point, is that engineering is driven by politics and money. It's not the way things should be, but it's the way things ARE. When design problems are discovered in a new product, it's not up to the design engineer to decide if it should get fixed or not. They report to higher management, who then must weigh the costs and potential dollar losses of fixing the bug. If it's critical, of course it will be fixed. But when a fix and re-spin sets the FCS date (first customer ship) back by 2 weeks or more, management views it as potential revenue losses (usually in the millions of dollars) and opens the door for your competition to be the first to market. What does this mean? It means that nearly everything ships with potential bugs. Whether or not the target market will notice these bugs also dictates if they get fixed. What's the point in prolonging the release of a new product when only 1 customer in 1,000,000 will discover the bug.
I agree with you that in terms of revenue, 3dfx has not been viewed as a serious threat to nVidia in a long time. However, the average consumer doesn't give a rats ass what the current market cap of either company is at. Just FYI 3dfx was worth about $100 million 1 week ago while at the same time nVidia was worth $2.5 billion. No comparison. However, most of the gaming community sees competition in terms of the technology, and their ability to make that technology readily available (that's why gamers don't use SGI workstations). 3dfx and nVidia have always held the forefront in competing, leading-edge technologies. Only with the release of the Radeon has ATI had a product worthy of deeming "leading-edge". In this case, consolidation is healthy for the merger of two technologies. But healthy for the consumer, I don't see how that's possible. nVidia now has access to current 3dfx patents. We may see a product or two from nVidia utilizing both technologies (which is good), but when that becomes obsolote, what then? They're not going to go digging into the archives of 3dfx patents for something new to try. It will already have been done. I'm really hoping to see the speed of nVidia graphics processors merge with the FSAA from 3dfx. But when that's been done and beaten to death, who will provide the next technology to make the R&D team at nVidia lay awake at night, sweating over how to make it better?
That leads me to my next and hopefully final point. The folks over at Microsoft don't have these same worries. Without any real competition, they have little motivation (besides pleasing the consumer) to make an outstanding product. They make outstanding GUI's on top of a POS operating system. Too many Windows users are brainwashed by the pretty graphics, ease of use, and convenience of the product to see what really lies beneath. And what does lie beneath? The whole friggin' OS! The interface is a miniscule fraction of the whole entity. I took 2 operating systems courses in college and worked 2 years ago as an intern for Borland software (now Inprise). I had to test our software on Windows, Linux, Solaris, UNIX, HP-UX, BSD, and AIX based systems. I've seen 'em all, played with 'em all, studied 'em all. I know what SHOULD be done in an operating system and what has/has not been done correctly in those previously mentioned. I assure you, Microsoft software engineers were either asleep or drunk when they taught the course on the difference between user and kernal modes. You DO NOT allow application software to make system calls in kernal mode where all system resources are available to f*ck up. If you walked into a college OS course and made the statement that Windows was a "high-quality" OS, you'd better pray that's it's April 1st so you have an excuse for making such a statement.
Please, all I'm asking here is that you don't judge the book by it's cover. Learn about operating systems, learn about what goes on underneath the shell/GUI, learn about shared memory vs. private memory, and forked processes, then ask yourself what's really happening when you see the BSOD? When the next Microsoft OS is released don't go celebrating because it looks prettier and makes it easier for you to share your phone line. Realize that an OS is perhaps the most complicated piece of software ever conceived. It is the result of hundreds of millions of lines of code. Code that has been re-cycled from the days of Win95 and NT without being re-tested. Code that has inherent design flaws and bugs. It would take Microsoft years to validate it and at least double that to re-write it. So they release it fully aware of the thousands of potential problems. There is far too much money at stake otherwise.
I just saw this over on 3dfxgamers. Provides some insight from a shareholder who has some theories on the nVidia/3dfx situation -
Just to make sure I got the link right, I'm posting the message in its entirety. It's a slightly different lingo, for those who don't know, but TDFX is 3dfx's ticker symbol on the Nasdaq stock exchange.
Hey BigTii,
I am not a techie but in discussing the recent news regarding TDFX, there are a couple of things that I want to make clear. Please understand that I am in no way attempting to sound like an expert or know about any insider info. One thing that my fellow investors and I are big on is logic. This is the scenario that we've put together, I would just like to hear your comments about it.
Alot of this information you will already be aware of but what we have done is tried to put the puzzle together.
Within the last 2 years, TDFX bought Gigapixel, STB, and filed a patent infringement lawsuit against Nvidia. The diversification process has been downright terrible.
Within the last year, Nvidia has raised over 500 million in cash. Why do you think that they raised all this money? Do you think that it was because of the royalties they felt they might have to pay if they lost the lawsuit? I don't think so, I think it was definitely because they wanted to buyout TDFX. With a buyout they could kill the lawsuit, take out a competitor, and increase their technology value significantly. All this info is very general but quite significant. I do feel as though TDFX would not be able to pursue the lawsuit independently. It is quite obvious that they wouldn't have the resources to pursue this long-term. I believe that the TDFX has never been interested in being bought out by Nvidia and would much rather be bought out by ATI or any other company who would, after buying TDFX out, pursue the lawsuit on their own. Nvidia knew that no matter what, this lawsuit is not going to just get dropped.
How much did TDFX pay for Gigapixel? I believe it was over $150 million. How much income have the Voodoo cards been bringing in for the last couple of months? I'm not trying to sound sarcastic with these questions but I'm just a little lazy to find out the exact figures.
There is no way that TDFX would buy Gigapixel for over $150 million and then six months down the line sell the Voodo line of products, brand name, Voodoo based patents, Rampage based technology & patents, & Gigapixel to their much hated rivals for barely over $100 million. C'mon now, in using logic we all know that TDFX hasn't sold all of these elements to Nvidia. The one thing that we do know is that TDFX is selling their brand name, Voodoo products, and Voodoo-based patents as well as a group of other patents as well as DROPPING THE PATENT INFRINGEMENT LAWSUIT to Nvidia. Is this good news? DEFINITELY. How much Profit have the Voodoo Cards been bringing in? Another key point in the recent announcement is that Nvidia is paying TDFX somewhere around $70 million and giving them 1 million shares of NVDA stock. This is the KEY POINT. Why would Nvidia give TDFX $1 million shares? They can obviously give TDFX another $50 million with all the cash they have raised. Let me tell you why, TDFX requested the deal like this because they can use the shares as collateral to the banks for future loans. If Nvidia gave them $50 million in cash that's all TDFX can get, but if they use these shares as collateral, they will be able to borrow more money in the future. But what about their bad credit? I do believe that TDFX will use a hefty amount of the cash received from Nvidia to pay off some debt. Did you notice how $15 million is a loan from Nvidia? Well at first we thought, the damn directors are going to give themselves a bonus and walk away happy while us shareholders get nothing. With more analytical thinking, we came to the conclusion that TDFX is doing the best thing that could be done for them right now. They are saying, screw the Voodoo line, screw STB, let's get rid of everything about the company that is not looking forward.
Right now, this is the position that TDFX is in, they have gotten rid of alot of the unprofitable parts within the company and are going to cut operating costs drastically. They now have some cash, a loan from Nvidia as well as collateral for the banks. I'm not sure at all if they have sold the Rampage-based technology to Nvidia but one thing I'm sure of is that they haven't sold Gigapixel to them. My gut feeling is that they haven't sold any Rampage tech and feel as though through this deal, TDFX is going to have the resources to be able to get Rampage out soon as well as focus on Gigapixel tech.
I feel as though the press release was made to sound horrific and at first glance it does, but with a little more insight, I think it is great news. I think that it is really saying : TDFX and Nvidia settle Patent Lawsuit out of court, and TDFX drastically cutting costs to pursue Gigapixel chip creation.
Once again I will restate the facts. TDFX diversification goes terrible, and files patent lawsuit against Nvidia. TDFX in bad shape with high burn rate and no profits. Nvidia raises a bunch of cash. TDFX in terrible shape & starts rebuilding process by selling Juarez plant. TDFX sells the money losing Voodoo-based products, patents, names, and settles infringement lawsuit for $70 million cash and 1 million shares of Nvidia stock. TDFX burn rate is much lower now and they can now focus on the good stuff. I don't know about you BigTii but this week I'll be buying a #### load of shares. This is no pump and dump just don't want shareholders to get screwed. Sorry so long
Just to make sure I got the link right, I'm posting the message in its entirety. It's a slightly different lingo, for those who don't know, but TDFX is 3dfx's ticker symbol on the Nasdaq stock exchange.
Hey BigTii,
I am not a techie but in discussing the recent news regarding TDFX, there are a couple of things that I want to make clear. Please understand that I am in no way attempting to sound like an expert or know about any insider info. One thing that my fellow investors and I are big on is logic. This is the scenario that we've put together, I would just like to hear your comments about it.
Alot of this information you will already be aware of but what we have done is tried to put the puzzle together.
Within the last 2 years, TDFX bought Gigapixel, STB, and filed a patent infringement lawsuit against Nvidia. The diversification process has been downright terrible.
Within the last year, Nvidia has raised over 500 million in cash. Why do you think that they raised all this money? Do you think that it was because of the royalties they felt they might have to pay if they lost the lawsuit? I don't think so, I think it was definitely because they wanted to buyout TDFX. With a buyout they could kill the lawsuit, take out a competitor, and increase their technology value significantly. All this info is very general but quite significant. I do feel as though TDFX would not be able to pursue the lawsuit independently. It is quite obvious that they wouldn't have the resources to pursue this long-term. I believe that the TDFX has never been interested in being bought out by Nvidia and would much rather be bought out by ATI or any other company who would, after buying TDFX out, pursue the lawsuit on their own. Nvidia knew that no matter what, this lawsuit is not going to just get dropped.
How much did TDFX pay for Gigapixel? I believe it was over $150 million. How much income have the Voodoo cards been bringing in for the last couple of months? I'm not trying to sound sarcastic with these questions but I'm just a little lazy to find out the exact figures.
There is no way that TDFX would buy Gigapixel for over $150 million and then six months down the line sell the Voodo line of products, brand name, Voodoo based patents, Rampage based technology & patents, & Gigapixel to their much hated rivals for barely over $100 million. C'mon now, in using logic we all know that TDFX hasn't sold all of these elements to Nvidia. The one thing that we do know is that TDFX is selling their brand name, Voodoo products, and Voodoo-based patents as well as a group of other patents as well as DROPPING THE PATENT INFRINGEMENT LAWSUIT to Nvidia. Is this good news? DEFINITELY. How much Profit have the Voodoo Cards been bringing in? Another key point in the recent announcement is that Nvidia is paying TDFX somewhere around $70 million and giving them 1 million shares of NVDA stock. This is the KEY POINT. Why would Nvidia give TDFX $1 million shares? They can obviously give TDFX another $50 million with all the cash they have raised. Let me tell you why, TDFX requested the deal like this because they can use the shares as collateral to the banks for future loans. If Nvidia gave them $50 million in cash that's all TDFX can get, but if they use these shares as collateral, they will be able to borrow more money in the future. But what about their bad credit? I do believe that TDFX will use a hefty amount of the cash received from Nvidia to pay off some debt. Did you notice how $15 million is a loan from Nvidia? Well at first we thought, the damn directors are going to give themselves a bonus and walk away happy while us shareholders get nothing. With more analytical thinking, we came to the conclusion that TDFX is doing the best thing that could be done for them right now. They are saying, screw the Voodoo line, screw STB, let's get rid of everything about the company that is not looking forward.
Right now, this is the position that TDFX is in, they have gotten rid of alot of the unprofitable parts within the company and are going to cut operating costs drastically. They now have some cash, a loan from Nvidia as well as collateral for the banks. I'm not sure at all if they have sold the Rampage-based technology to Nvidia but one thing I'm sure of is that they haven't sold Gigapixel to them. My gut feeling is that they haven't sold any Rampage tech and feel as though through this deal, TDFX is going to have the resources to be able to get Rampage out soon as well as focus on Gigapixel tech.
I feel as though the press release was made to sound horrific and at first glance it does, but with a little more insight, I think it is great news. I think that it is really saying : TDFX and Nvidia settle Patent Lawsuit out of court, and TDFX drastically cutting costs to pursue Gigapixel chip creation.
Once again I will restate the facts. TDFX diversification goes terrible, and files patent lawsuit against Nvidia. TDFX in bad shape with high burn rate and no profits. Nvidia raises a bunch of cash. TDFX in terrible shape & starts rebuilding process by selling Juarez plant. TDFX sells the money losing Voodoo-based products, patents, names, and settles infringement lawsuit for $70 million cash and 1 million shares of Nvidia stock. TDFX burn rate is much lower now and they can now focus on the good stuff. I don't know about you BigTii but this week I'll be buying a #### load of shares. This is no pump and dump just don't want shareholders to get screwed. Sorry so long
First, I don't entirely agree with what this guy has to say. It seems a little far-fetched and optimistic to me. If I understand what he is trying to say, he is hoping that TDFX will rise from the ashes with new cards based on the Rampage and Gigapixel technologies. There are two problems here: 1) any new product would have to be a COMPLETELY NEW product. Any thing based on previous TDFX technology and they would get their asses sued by NVDA, a.k.a. the new owner of all TDFX patents. and 2) NVDA has complete control over Gigapixel assets at this point. Brian Burke from NVDA said so in the interview he gave to Gamers Depot. So any contingincy plans for the reminents of TDFX are based on NVDA's own stupidity or flat out dumb luck. I think this guy is an overly-optimisitc former shareholder in TDFX.
As for the rest of the comments made, all I can say is that I never claimed to know anything about the computer industry. The point you make about everyone releasing flawed products is exactly what I am trying to say. Your original comments said that MS's quality had dropped and prices skyrocketed die to a lack of competition. My point is that is an inherently flawed arguement b/c its not possible to release a perfect product. The fact is is that the wars with Netscape, et al. helped the interent to grow to what it has become today. The incredibly stiff competition between MS and Netscape/AOL caused prices to drop all the to zero for browsers. I can promise you that the interent wouldn't be as popular as it is today if people still ahd to pay $30-$50 just to get the software needed to get on the net. Free doesn't exactly sound like a "sky rocketing" price to me.
As for the rest of the comments made, all I can say is that I never claimed to know anything about the computer industry. The point you make about everyone releasing flawed products is exactly what I am trying to say. Your original comments said that MS's quality had dropped and prices skyrocketed die to a lack of competition. My point is that is an inherently flawed arguement b/c its not possible to release a perfect product. The fact is is that the wars with Netscape, et al. helped the interent to grow to what it has become today. The incredibly stiff competition between MS and Netscape/AOL caused prices to drop all the to zero for browsers. I can promise you that the interent wouldn't be as popular as it is today if people still ahd to pay $30-$50 just to get the software needed to get on the net. Free doesn't exactly sound like a "sky rocketing" price to me.
On a long enough time line, the survival rate for everyone drops to zero.
I agree. It seems like he is trying to justify the dissolution of 3dfx. Makes a number of assumptions that have yet to be seen. If a small subset of 3dfx engineers decide to stay and develop a new product it would have to be based upon entirely new technology. That's going to be a major challenge. Speaking from experience, when engineers leave a company to join with a competitor they often incorporate previous knowledge without even realizing it. Many patent infringments are caused by this. 3dfx cannot run with rampage because, while it is a new graphics processor, the architecture incorporates technologies that are now owned by nVidia. Starting from scratch will take years of catch-up work. That's how nVidia is able to churn out another GPU in 6 months, Intel 2 years, and MS 2+ years. They don't have to start from the beginning. Why re-invent the wheel right?
Too much speculative bollox here.
There will be no new gfx products from 3DFX, the company will be disolved, end of story. Nvidia asset stripped the company so that:
1) They get the lawsuit dropped.
2) They get any useful tech from 3DFX (who else would buy it if not another 3D card maker?).
3) They take out a competitior.
4) They don't get stuck with any of the debts as they would if they went complete buy out.
The money 3DFX got from Nvidia will mostly go to paying off the companies creditors and paying out the major shareholders when the company is liquidiated. Oh and paying the managers they're leaving bonuses of course, can't forget that. Any share revenue will go to paying off outstanding debt and it's easier for Nvidia to give shares than pay out cash (share money doesn't have to come from Nvidia's coffers).
If Nvidia hadn't made they're offer then 3DFX would just have gone bankrupt nothing else, they simply ran out of cash. IMHO 3DFX should stuck to making good reference boards and shoulda dumped the Voodoo line ages ago for a new architecture. Maybe some of the ex-techs will put together a little company but I don't see it very likely, or that we will see any cards coming from them as they will have to go completely from scratch as Nvidia owns all rights to the old tech.
Darkheart
1) They get the lawsuit dropped.
2) They get any useful tech from 3DFX (who else would buy it if not another 3D card maker?).
3) They take out a competitior.
4) They don't get stuck with any of the debts as they would if they went complete buy out.
The money 3DFX got from Nvidia will mostly go to paying off the companies creditors and paying out the major shareholders when the company is liquidiated. Oh and paying the managers they're leaving bonuses of course, can't forget that. Any share revenue will go to paying off outstanding debt and it's easier for Nvidia to give shares than pay out cash (share money doesn't have to come from Nvidia's coffers).
If Nvidia hadn't made they're offer then 3DFX would just have gone bankrupt nothing else, they simply ran out of cash. IMHO 3DFX should stuck to making good reference boards and shoulda dumped the Voodoo line ages ago for a new architecture. Maybe some of the ex-techs will put together a little company but I don't see it very likely, or that we will see any cards coming from them as they will have to go completely from scratch as Nvidia owns all rights to the old tech.
Darkheart