Post of the Day
July 1, 1998

From our
3Dfx Board


Subject: A survey of 20 retailers
Author: zlayde

As an investor, I've been particularly concerned over the issue of Voodoo2 (and less so Voodoo1) sales and whether they were beginning to dwindle. Or, phrased differently: Is 3Dfx's market for 3D add-on cards reaching a saturation level? As everyone knows, MONT hinged its decision to downgrade TDFX on this very issue.

I've heard arguments going both ways. Some say the high-end add-on market is very finite and contributes to very limited growth. Others say the add-on market is much bigger than many have expected and that the ceiling hasn't even been reached (citing the blowout earnings of 3Dfx's last 2 quarters). So I decided to conduct a survey. I decided to call 20 retail sellers of computer hardware (computer superstores and internet/mail-order sellers) spread all over the United States.

Now I am not a pro at conducting surveys. However, I did make every attempt to not lead the person into giving me answers I wanted to hear. I first stated that I was conducting survey for a popular computer hardware website. I requested to speak to someone knowledgable in video cards. Then I asked a few questions. The questions were posed as follows:

1. What is your best selling video card?
2. Are the sales for video card X (whatever there answer was to #1) slowing down, picking up, or steady?
3. Any other comments/impressions?

OVERALL RESULTS:
- Of the 20 retailers called, 17 were willing to answer my questions.

- Of the 17, 16 stated that their best selling cards were the Voodoo2 cards. This is really not surprising, considering stats by PC Data showing Voodoo2 peripherals being top sellers. On place (Fry's, Palo Alto, Calif.) stated their $50 PowerVR was the best seller, but that the Voodoo2 cards would be the best if they could keep them in stock or get them in stock.

- Question #2 is the one I was most interested in. It's common knowledge that the Voodoo2 is a top-seller. But is it still selling well? Of the 17 surveyed:

- Slowing down: 4
- Steady: 11
- Picking up: 2

What is worth pointing out is that "steady" can mean many things. It can mean steadily slow. But the impression I got was strong and steady. As you'll see from the quotes I got, the Voodoo2 sales seem to have plateaued but are still going at a strong pace. NOBODY complained of being stuck with dead inventory. If anything, "slowing down" meant that sales were coming down to earth.

- Voodoo1 sales. Voodoo1 sales are still good. One particular call (Computer City, Toronto, Canada) mentioned that they are overstocked with Voodoo1's, but that this was their slowest time of year and they expected things to pick up in the fall/holiday season. You'll notice some comments on Voodoo1 sales in the quotes from employees.

- Branding has been discussed ad nauseaum on this board, and by 3Dfx's own management. But as you'll see from the quotes I got, it really is a key factor in 3Dfx's sales.

VARIOUS COMMENTS/IMPRESSIONS
----------------------------
ComputerCity (Smyrna, Georgia)
Best seller: VooDoo2
"sales are going well, it is THE card apparently - that's the one they want"
-----------------------------
ComputerCity (New York, NY)
Best seller: Voodoo 1 & 2
"Sales have gone up."
---------------------
CompUSA (Edison NJ)
Best seller: Creative Voodoo2 & Diamond Monster II
"People come in and ask for it by name all the time."
--------------
CompUSA (Dallas, TX)
Best seller: Creative Voodoo 2
"We've been trying to push what we have of the Voodoo 1's'"
--------
CompUSA (San Diego, CA)
Best seller: STB Black Magic 2
"I always recommend any of the Voodoo cards, I usually use 3dfx by name to help me sell the product."
-----------
CompUSA (Woodbury, MINN)
Best seller: All Voodoo 2
"It's been slow all around of late but relative to that, since they've gotten here, the new Voodoo cards have done well"
---------
CompUSA (Spokane, Washington)
Best seller: Diamond Monster II
"Diamond & Voodoo related products do very well here, people like 'brand' names, they don't know much about computers."
--------
ComputerCity (Las Vegas, Nevada)
Best seller: Voodoo 2
Not very friendly, just said that the Voodoos were his best one and that was that.
-------
Fry's (Paolo Alto, CA)
Best seller: Videologic
On the Voodoo 1 & 2: "eventually, we expect these products to be our best sellers, but a lot of the Voodoo2 products are only slowly dripping in here."
-----
Fry's (Freemont, CA) "Any of Voodoo2 products, both Diamond Monster & Creative Labs are attracting most of the attention"
These guys were waiting on advanced orders.
--------
CompUSA (Nashville, TN)
"We're overstocked with them right now, but Diamond products, especially the ones which utilize the technology, do very well."
-------
CompUSA (Greensboro, NC)
Best seller: All Voodoo2
"Voodoo 2 products are attracting a lot of interest...Voodoo 1 is still selling briskly."
---------
CompUSA (Boise, IDaho)
Best seller: Diamond Monster II, Creative Voodoo 2, older Voodoo 1
"Sales are still strong."
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Buycomp (online/mail order)
Best seller: mostly Voodoo or Diamond products
"First time buyers always come back for an upgrade"
"Well stocked but selling well."
-------
Comp. Warehouse (online/mail order)
Best seller: Monster II
These guys were overstocked, but they guy admitted it was b/c of their buyer
"Voodoo 2 products are recognized as the cutting edge"
-------
ComputerCity (Toronto, Canada)
Best Seller: Monster II
Voodoo 1 is a bit overstocked and they're expecting to be stuck with a number of those, overall sales are slower right now than later on in summer and towards the Holidays season. Voodoo2 sales are "strong."

----------------------------
That's it. I'd just like to say that this mini-survey is in no way conclusive of anything. There are thousands of retailers out there. However, I conducted this survey to get a TASTE of the situation out there from the retailer's end. I hope you'll find this information helpful, but I wouldn't base any decisions on it. My personal impression is that the market is not saturated, but that the frenzy of sales is levelling off to a more normal level (as expected I suppose).

Thanks for reading through it,
Zlayde


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