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S3 Buys Diamond Multimedia
Anonymous Cowboy wrote in
to tell us that S3 has aquired Diamond Multimedia.
"Why" is still sorta up in the air, but hey, consolidation is
all the rage these days. Maybe they'll bundle Rio's with
video cards or something.
First up, I would say that due to the 3dfx/STB linkup, and this shoe dropping today, this trend is probably gonna go a bit further before it's all over. And if I was laying odds, here's how I think that it would/will play out, over the next couple years:
1. I think that the S3/diamond linkup, is likely. It may require some changes in the makeup of the takeover, but I think that at some price, it will happen.
2. Once it's signed and sealed, Nvidia, is going to be left in an untenable position. True, there are several small companies supporting them. But 2 of their biggest customers, are now going to be totally in bed with their enemies.
3. Either Creative will snap up Nvidia, or Hercules will get snapped up by Nvidia, or some combination of the three even, possibly. Whoever gets left out of this stage, is hosed, as far as video cards go. Sure there are options, but none are very palatable, once S3, Nvidia, and 3dfx are all captive organizations.
4. Moving forward, once the M&A frenzy starts to die down, I would say that in terms of cutting edge tech, the advantage will be to either ATI, or Matrox, for the next couple years. 3dfx, S3, and Nvidia, are going to be preoccupied for some time, absorbing and integrating into their new organizations, and engineering WILL suffer as a result. Once the suits start hacking away at organizations, nobody is gonna be very comfortable for a bit.
And regarding Nvidia's chances, I'd say that once the market realizes what's going on in this segment,and it dawns on analysts that nvid's market share is going to suffer as a result of what's happened so far, their stock is likely to get hammered down, and very likely Creative will take that opportunity to snap them up.
What do I think of this, as a consumer? I'm not sure. I think that it's not as catastrophic as some fear mongers are saying. Realistically, this shouldn't have too big a real effect on the competitive market in video cards. If Creative is the only big guy making Nvid cards, so what. It's not like there was a significant difference between their cards, and Diamonds anyhow. Both card companies basically used reference designs on their stuff anyhow. And there will still be plenty of price competition, just not within the same chipset. A Diamond/S3 card, is still going to be living in the same space, as a Creative/Nvid card, and will still have to be price competitive. You'll just have to spend a little more time comparing specs, and seeing who has a better total package, and not just comparing 2 functionally identical cards to see who has the best price.
"Politicians are interested in people. Not that this is always a virtue. Fleas are interested in dogs." P.J. O'Rourke
Don't forget a few months ago 3dfx tried to buy Diamond instead of S3.
But the deal didn't go through so they decided to buy STB instead. If people are wondering why S3 is buying Diamond just go back about 4 months and read all the interviews with 3dfx spokespeople about why they were buying STB.
OEM deals are where the money is and it is difficult for a chip company such as S3, nVidia, and the old 3dfx to get design wins with companies like Dell, HP, etc.
ATI made crappy low end junk but had the most market share because of all the OEM deals. They gave the OEMs what they wanted, a guaranteed supply of low cost boards along with excellent support.
OEMs don't care about the absolute fastest thing, they need a guaranteed supply first and foremost.
S3 realizes that in order to compete with the integrated chip/board companies like Matrox, ATI, and 3dfx/STB they need to sell boards as well.
nvidia knows this too, it's just a matter of time.
There is one other reason for S3 to buy Diamond. One of 3dfx's reasons was faster time to market if you build the boards yourself but the reason reason is more $$$ from OEM deals.
Great... now that NVIDIA seems to be one of the leading 3D hardware providers to support Linux, who's gonna actually make the cards? STB? er.. no, 3dfx only. Diamond? Nope, they're an S3 shop. Guess that leaves Creative, and all of the taiwanese clone boards. For one, this means less competition for NVIDIA-based boards, so I assume that Creative will be free of some price pressures. Damn... wonder how long 'til Pepsico buys 'em all.
Is there some paper or article that can explain why companies are buying eachother? Is it for tax reasons? To avoid patent licensing fees? To buy a competitor out? An excuse for layoffs? What is the rationale behind all of this? It seems like a company is a nobody if it isn't considering buying someone these days.
Why? Not a difficult question to answer. Same reason why 3dfx bought STB... Chip manufacturers want more control over the final product. When you only make chips, it's up to the whim of the board manufacturer what size/type of memory to use, what clock speed, what features, etc. S3 must be realizing they can put out a better total package if they have control over the entire path from the chip to the monitor plug.
It will be interesting to see how these new "uber-companies" compete with companies like ATI, Matrox, etc. who already do the chips and boards by themselves.
If these board company buyups prove to be successful, watch for other chip-only companies like nVidia, etc. to follow the lead.
What's wrong with providing hardware for the cheaper computers? I do not quite understand your logic of hating them. Could you explain, or do you have some kind of grudge against Packard Bell?
Nothing really. They basicly won the 2D chipset market 2 years ago with some very decent chips (Matrox was faster, but S3 was MUCH cheaper).
Then they did a HUGE misstep with the S3 Virge 3D chipsets, which were somewhat buggy for 2D and really bad for 3D, even at that time. This caused S3's reputation to suffer greatly, and they lost a lot of the customer loyalty, from both vendors and end-users.
The new Savage 3D chipsets are reported to actually be pretty good, performance-wise, but it is also reported that they need better drivers for Windows 9x, and I don't think that S3 has released specs for the XFree86 community yet.
>How long before Nvidia/Permedia/#9 or whoever teams up w. Creative leaving us with out a venue for interesting 3rd party chips such as the TNT
TNT = nVidia
I'm not sure how attractive Creative would be for a video processor company to buy. Isn't Creative into all kinds of multimedia products like sound cards, cd roms and such?
But I agree overall that chip mfrs. like 3dfx and S3 buying card fabricators will probably mean less choice and for consumers, less competition which could mean lower quality and higher prices (lower value) for customers. Right now when a chip like TNT2 comes out, I can look around and see which card mfrs. have the better drivers, software bundle, added features and price. It would stink if that goes away.
True, not a fair comparison. When I got the card it was part of a $3000 PC (before I started building my own) that was supposed to be a 3d-accelerated multi-media machine. Probably true that this was mostly the fault of Gateway for putting this card into a machine to do something it wasn't capable of, I still thought it was a piece of crap.
We might all be working for an American Company owned by a filthy rich person in Redmond, Washington. You wouldn't have to worry about competition or big brother, but just the "man."
His company would be tight with the military and star wars defense system. He would know where your house is. If you do not use his operating system, he will have other ways to control you. Your silence will always be appreciated.
From ZDNN:
Diamond shareholders balk at S3 deal
The full story should be very interesting.
Keith Russell
OS != Religion
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> Maybe they'll bundle Rio's with video cards or something.
Hrrmmm... Well, since Diamond already makes video cards (just got my Viper 770 Ultra last month) they could have done this bundle without S3.
I'm not real excited about this because I'm very happy with Diamond (good hardware, great drivers) and my previous experience with S3 (Virge, need I say more?) was bad.
When companies get bought like this, it seems the reasons are to get an instant market share boost (Diamond seems to have a very strong presence in the 3D accelerator market) and to take advantage of 'synergies' - which usually means eliminate overlapping staff. Unually it is the company being bought where the 'overlap' is eliminated.
I don't have anything concrete to back this up, but I'm just uneasy that this move is probably in the best interest of S3 stock-holders (if they are even public?) and not in the best interest of customers who already own Diamond products.