3dfx to retreat from graphics card market

Former 3D graphics giant abandons board manufacturing and returns to roots in an attempt to recover its ailing fortunes

Source - CNN fn

Just two years ago 3dfx bought board manufacturer STB so that they could design, build and sell graphics cards based on their own Voodoo family of processors. At the time 3dfx were at the top of the PC graphics industry, their Voodoo 2 was the fastest 3D accelerator on the market, and you could buy graphics cards based on the chip from half a dozen different board manufacturers. But the STB buy-out proved to be an ill-fated decision, upsetting 3dfx's former partners and distracting the company from what they did best - designing graphics chips. Profits at 3dfx have slumped since the take-over, and a series of costly product delays has forced the company to slash prices so that their cards could compete at the lower end of the market. Meanwhile all the jilted board manufacturers dumped by 3dfx in 1998 have turned to NVIDIA, whose GeForce family of cards now dominates the market, and is available in literally dozens of different brands and variations.

Two days ago news emerged from 3dfx that their foot-long four processor Voodoo 5 6000 graphics card had been cancelled after an entire year of delays left it seriously behind the times. Intended to retail at $600, it would have found itself going toe to toe with the GeForce 2 Ultra, a single chip card with similar performance, more features, and a $500 price tag. Although the board will not now be produced, 3dfx have licensed the technology behind it to Quantum3D for use in their AAlchemy workstations.

Following on from that revelation, 3dfx have now announced that they are withdrawing from manufacturing graphics cards entirely, and going back to their roots. The former STB plant in Mexico which built 3dfx's graphics cards will be shut down, and the company will instead rely on licensing their graphics chips to other manufacturers, as they did with the Voodoo and Voodoo 2. 3dfx's Lisa Grubb told CNN that "we are reinventing ourselves", and it is certainly a drastic move for the company. The real question though is whether board manufacturers who have established a healthy relationship with NVIDIA over the last two years will want to license future chipsets from 3dfx. Their next generation of graphics chips will have to be very impressive to woo manufacturers away from the GeForce family, a new improved version of which appears almost like clockwork every six months.

"In the past, we've put out a lot of expectations and have failed to meet them", admitted Nayan Patel, divisional marketing manager of desktop graphics. "We have a big black eye right now in our ability to execute. We know that."

3dfx will also be expanding into multimedia, following on from the recent launch of the VoodooTV range of TV and radio tuner cards, and their other recent acquisition (GigaPixel) will allow them to branch out into developing graphics solutions for everything from set top boxes to mobile phones and handheld devices. Whether this will be enough to rescue the company remains to be seen though, as their share price continues to hover around the $4 mark, leaving them wide open for a hostile take-over bid from rivals NVIDIA or another company.

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