Almost everybody in the industry knows what announcements are going to be made before they are actually made. They may not know in exact detail all the time but we generally have a pretty good idea due to the various discussions held over drinks, lunches, e-mails, hallways, and conferences. A word here, a word there, an innuendo, a nod, a wink, all the clues that give us intelligent people insight into the intentions of the suppliers, to our robust and exciting industry.
We all know, for example, that Nvidia is going to be making a couple of announcements next week—I guess by the time you read this it will be this week— and although many of the details have leaked out, Nvidia has been particularly closed mouth this time and who can blame them?
You may also know that AMD is going to announce an all-platform solution using AMD processors, AMD chipsets and, of course, AMD graphics boards. This too was supposed to be announced in the near future and yet you can find it all over the web if you look for it (http://www.theinquirer.net/gb/inquirer/news/2007/10/06/working-rv670phenom-system).
So how did it get there? Well AMD, like NVIDIA, and Intel, have “partners”. These partners get the products ahead of time because they need to have them ahead of time so they can create their own marketing plans and make sure that they have adequate inventory to supply the consumers who will hopefully want these products. Since they are so proud of these products, the partners, that is, they like to show them off and, in particular, show off how they have specifically implemented them. This has been a common problem with the motherboard builders in Taiwan for about 10 years or more now. It’s not uncommon to go to a major trade shows like CeBIT or Computex and see the next generation CPUs, chipsets and other devices all in motherboards that have not yet been released.
The ODMs in Taiwan who do this justify their behavior on the basis that the OEMs need sufficient lead time in order to test and evaluate and configure these systems for their SKUs. All that is logical, makes sense and, is understandable. What’s not understandable is the blatant lack of confidentiality and confidence that the Taiwanese ODMs exhibit. It totally takes the wind out of the sails of PR efforts of the major semiconductor brands. Now one could argue that the major semiconductor brands shouldn’t be making major press announcements and that’s something that should be left to the OEMs as is the case for consumer TVs and automobiles. You may notice how restricted are the design win announcements from the semiconductor manufacturers when they’ve got a part in a new TV, DVD, mobile phone, or automobile. That’s because those sellers of consumer products tightly control the information about their products and almost never reveal what’s in their products. Apple Computer also falls in this class.
So what’s a struggling multibilliondollar semiconductor company to do? On one side it wants to win the favor of the ODMs and subsequently the OEMs. on the other side it wants to make sure that its stock is trading at the highest PE possible and to do that there has to be a lot of hype, spin, and news about the company to get people to buy shares in a firm that builds such esoteric and often intangible devices. The answer? Nothing. We’re stuck.
This is the behavior of the industry and as red-faced and frustrated as the PR and marketing people in the semiconductor companies might get, there’s not a damn thing they can do about it. They’re not going to tell the ODMs not to show off the motherboards and the graphics boards, that would be counterproductive. The one thing they could do, but they won’t, is cut off some of the publications and websites that pre-announced products regardless of where they got the information. That’s behavioral training and it would work; the publications and websites are dependent on advertising dollars to survive. And if they knew that a company, like let’s say Apple for example, would absolutely cut them off if they crossed the line on confidentiality, they wouldn’t cross that line. So the difference between Intel, Nvidia, AMD, and Apple is Apple controls their information channel and the rest don’t. Lessons to be learned here?
The flip side of this is that publications and analysts who don’t try to put up the latest information every second are turned off by these pre-announcements because it makes any subsequent announcements moot. This is just the opposite of what the semiconductor manufacturers want to accomplish. They want as broad a coverage of their products as possible in as many different publications, websites and analyst reports as possible so that they can influence as many potential stock buyers as possible (they don’t have to influence the ODMs or the OEMs because they already know each other very well).