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Running scared – runnin’ fast

Posted: 10.18.04
no Shop

I was pleased to see that a major three-letter market research firm has caught up with us and now agrees that the PC industry will probably have a nice 12% to 14% year-to-year growth in 2004. Pretty good, right? Yes, but only if the GPU and VPU suppliers don't screw it up. Right now those xPU guys are doing just about everything wrong. They're taking pot shots at each other over one technical detail or another, some qualification or another, benchmarks, and about the only thing they aren't doing is criticizing each other's wardrobe, not that any of them are snappy dressers.

But most of all they can't ship their lovelies. Every day we get calls from users, websites, AIB builders and investors asking us what we've heard about availability. And almost every day I ask the xPU guys, who give me the happy-face answer, "Boy, demand is great." We hear some AIB suppliers won't be affected by the tight supply because they have sufficient inventories of xPU chips stored at their plants in Taiwan and China. I doubt that—no one stores inventory in this JIT business. Look at the heat Intel took from Wall Street when they let their inventory ratio get too high and had to start dumping. happy face happy face happy face. So, since we can't ship, and don't want to talk about that, let's throw some more spit balls at each other.

It's got to get better, real soon. We're heavy into the retailer loading schedules, and if we want this to be a happy holiday season there better be a bunch of AIBs on the dealers' shelves and available from the websites. Oh, but wait, what will they use them for? Right now it's "Far Cry" and "Doom3." Yes, yes, I heard, Valve is going to ship "Half-Life 2" (or is it 3 now?) in November—of course, they didn't specify the year . . .

So we may have to revise our rosy forecast if the game developers and the xPU suppliers don't get their acts together. But not to worry about your 401k plan or stock options, because the big market research firms won't learn about it until they actually go into a store, and by then you can cash out.

The consoles, however, are gearing up, and a bunch of new titles are coming out from the three suppliers plus some interesting third-party stuff if the Tokyo Game Show is to be believed. I sure didn't see much at ECTS that gave me any titillation.

And while the big xPU guys are busy break-dancing in each other's faces, the little guys like S3 and XGI are out making deals. I think we're going to see a very surprising fourth quarter this year with regard to market share. Intel is running a little late with their new IGP, while getting rid of the older IGCs, and hoping PCIe takes off like their program managers forecasted. AMD, Transmeta and VIA couldn't be happier about Intel's difficulties, and are shipping everything they can.

So overall it looks like it's going to be a great year. Demand is strong, and this time the second-tier folks will have a bigger opportunity as the heavyweights like ATI, Intel and Nvidia struggle to live up to their promises.