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Gigapixel Not Out The X-Box Race

by Maarten Goldstein, Jun 07, 2000 3:23am PDT
Related Topics – 3dfx

pimpium sent word of this interesting document that relates to the merger of 3dfx and Gigapixel. Apparently, Gigapixel got a contract with Microsft where they will try and get a superior graphics chip out before June 2001, after which Microsoft may excercise the option to drop NVida.

GigaPixel entered into a development agreement with Microsoft on February 18, 2000 to develop a highly advanced graphics chip design for use in Microsoft's soon-to-be-released "X-box." <snip> In early March, Microsoft advised GigaPixel that it intended to cancel the development agreement with GigaPixel and use another provider's 3D chips and technology. On March 31, 2000, Microsoft and GigaPixel entered into a release agreement under which Microsoft paid to GigaPixel the up-front development fees of $14 million as provided by the development agreement. The release agreement severs the proprietary development relationship between the companies and provides that GigaPixel will use its best efforts to deliver by June 2001 a non-proprietary sample of a product similar to the originally specified design. The non-proprietary sample is intended to demonstrate the features and performance of GigaPixel's advanced graphics chip technology. <snip>




Comments

45 Threads | 73 Comments

  • I'm not disagreeing that it isn't a lock with Nvidia, in fact, on the contrary, I posted how it was NOT a lock in the original post. On the other hand, MS didn't set that up as charity if they decided to back out. The dates, if nothing else, make it very hard to switch horses that late in the game unless you have a significant lead in performance from whatever Gigapixel/3dfx comes up with, and then you have to factor in 3dfx's long delays lately unless they completely turn that around.

    3-6 months to completely change chips for the box is very agressive. Just look at how long it took playstation to do the Japan release after samples went out to developers, and how much longer it is taking to produce enough product to handle demand for a US release. Then, you factor in that you want good, stable software, and that short time after a potential change to retest and tweek strains you on release product, which is critical in a console release, since that is ALL you buy the thing for.

    $100 Million in ownership is a "business relationship" if I've ever heard one. I'd say it is about an 85%-90% probability that Nvidia is going to be producing the chips, and MS thinks so at the moment, or they wouldn't have agreed to structure it that way.

    Also, if you look at the Gigapixel 3dfx merger document, there is a lot of talk about a WebTV chip. They may get that in the end, who knows.

    Of course, MS has never delayed a big product before :)


  • Here is the relevant Nvidia S-3 filing comments for a stock offering filed with the SEC 3/29:

    On March 5, 2000, we entered into an agreement with Microsoft in which we agreed to develop and sell graphics chips and to license certain technology to Microsoft and its licensees for use in a product under development by Microsoft. The agreement provides that in April 2000, Microsoft will pay us $200 million as an advance against graphics chip purchases and for licensing
    our technology. Microsoft may terminate the agreement at any time and if termination occurs prior to offset in full of the advance payments, we would be required to return to Microsoft up to $100 million of the prepayment and to convert the remainder into our preferred stock at a 30% premium to the 30-day average trading price of our common stock.


    So, what it says is MS basically ordered $200 Million worth of chips from Nvidia, and gave them the money in April. If MS wants, they can cancel their agreement at any time, and Nvidia would pay them back $100 Million in cash and convert $100 Million into preferred stock at a price 30% above market (preferred being non-voting).

    If they gave Nvidia $200 Million, that to me says that they are pretty sure they are going with them. Yes, they could back out at any time, but if they intended to do that, why would they make an arrangement to purchase Nvidia stock on the way out the door?

    Who knows, but I doubt seriously that MS will change suppliers based on the above. It could happen, but I wouldn't go out and buy a bunch of stock based on it.

    I wouldn't make this a reason to go out and buy a bunch of TDFX, but that is just me :)









  • If Gigapixel can get the design done, which they already have with the GP-1 and GP-2 (taking someone else's word on the second, I hadn't heard of this before), then they should be circumventing the 3dfx engineering issue anyways. They could have STB just manufacture the boards or even ask tsmc or some third party to actually fab them. THe problem at 3dfx, iirc, is that they can't design a board on time and that is competitive. This would all be done by gigapixel, 3dfx would just have to sign on the dotted line (if they have finalized the purchase of gigapixel) and possibly help them find fab capacity.


  • I think that Gigapixel still has a serious shot at the X-box contract.

    Yes, it's true that 3dfx has been busy shooting themselves in the feet lately but I doubt they will do anything to jeapordize the Microsoft deal. In fact having 3dfx's resources behind them, Gigapixel may be able to pull a fast one over on Nvidia.

    Gigapixel is still basically a separate company, so saying that they will fail like 3dfx because 3dfx now owns them is a bit narrow-minded.

    Gigapixel had the lead in the x-box race until Nvidia snatched it away. And as that agreement with Microsoft shows, Gigapixel is still in the race.

    Things can change drastically in a years time. Just look at a year ago when Nvidia and 3dfx were basically on equal ground.

    3dfx has the talented people and the money... they just need to execute instead of slowing down. Maybe Gigapixel can guide them out of the darkness...

    In any case, all this competition is good.





















  • Something like this goes to prove that Microsoft will do anything it needs to in order to get to (or stay at) the top. How many times have we seen companies (not just hardware, but game companies as well) stay with what they consider "slightly outdated" technology because they either "started it that way and will finish it that way" or because of contractual (is that a word? :o}) issues?

    I'm not saying that nVidia is "outdated" (not by a long shot), I'm just saying that in a way, it's good to see Microsoft saying "Wait a minute. If we can get better, kick-ass gfx from someone else, even though we made 10 announcements that nVidia is our man, why should we be obligated to them?".

    I'm a game freak, as many or most of you all are. I want to see the Xbox be as much of a killer system as the next guy. If it takes stepping on a few toes and hurting some feelings, I say go for it.

    Then again, I could be wrong ... I DID just wake up. o_O

    Love, peace and hair grease,

    -Xak