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S3 Buys Diamond Multimedia 105

Posted by CmdrTaco from the consolidations-the-game dept.
Anonymous Cowboy wrote in to tell us that S3 has aquired Diamond Multimedia. "Why" is still sorta up in the air, but hey, consolidation is all the rage these days. Maybe they'll bundle Rio's with video cards or something.
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S3 Buys Diamond Multimedia More

S3 Buys Diamond Multimedia

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  • Pepsi owned Pizza Hut, Kentucky Fried Chicken and Taco Bell. They spun them off a few years ago into their own company. Look at the delivery trucks for these three, they all have each others logos on them. Easy way to look at, notice the Stars Wars commercials with the little dog, The Colonel and that Pizza Hut Chick.
  • a) Virges are dog-slow compared to any other 3D chipset. Even ATI can consistently beat them.

    b) Virges have had a long-lasting habit of misreporting PCI memory usage. This requires anyone using a 3Dfx or Bt848 tuner to run all sorts of workarounds. I think other memory-mapped cards may be affected, too.
  • Companies buy other companies for lots of reasons. Diversifying their product line is only part of the reason.

    Companies often buy other companies to take control of their destiny. They may buy a competitor to gain more market share, and with market share, greater ability to steer the market with respect to pricing and product cycles.

    They may buy a customer to gain more influence on the consumer side of their market. I think this is the case with S3. Diamond is probably one of their biggest customers. Diamond is on shakey ground financially, and if they flounder it would be very bad for S3.

    Buying a customer has other advantages as well. If your customer happens to be a big customer of one of your competitors as well you can buy them and close off one of your competitors major distribution channels.

    This can adversely effect your competitors cashflow for some period of time and allow you to gain the upper hand. A position you might exploit in the future by buying up the weakened competitor.

  • First up, I would say that due to the 3dfx/STB linkup, and this shoe dropping today, this trend is probably gonna go a bit further before it's all over. And if I was laying odds, here's how I think that it would/will play out, over the next couple years:

    1. I think that the S3/diamond linkup, is likely. It may require some changes in the makeup of the takeover, but I think that at some price, it will happen.

    2. Once it's signed and sealed, Nvidia, is going to be left in an untenable position. True, there are several small companies supporting them. But 2 of their biggest customers, are now going to be totally in bed with their enemies.

    3. Either Creative will snap up Nvidia, or Hercules will get snapped up by Nvidia, or some combination of the three even, possibly. Whoever gets left out of this stage, is hosed, as far as video cards go. Sure there are options, but none are very palatable, once S3, Nvidia, and 3dfx are all captive organizations.

    4. Moving forward, once the M&A frenzy starts to die down, I would say that in terms of cutting edge tech, the advantage will be to either ATI, or Matrox, for the next couple years. 3dfx, S3, and Nvidia, are going to be preoccupied for some time, absorbing and integrating into their new organizations, and engineering WILL suffer as a result. Once the suits start hacking away at organizations, nobody is gonna be very comfortable for a bit.


    And regarding Nvidia's chances, I'd say that once the market realizes what's going on in this segment,and it dawns on analysts that nvid's market share is going to suffer as a result of what's happened so far, their stock is likely to get hammered down, and very likely Creative will take that opportunity to snap them up.


    What do I think of this, as a consumer? I'm not sure. I think that it's not as catastrophic as some fear mongers are saying. Realistically, this shouldn't have too big a real effect on the competitive market in video cards. If Creative is the only big guy making Nvid cards, so what. It's not like there was a significant difference between their cards, and Diamonds anyhow. Both card companies basically used reference designs on their stuff anyhow. And there will still be plenty of price competition, just not within the same chipset. A Diamond/S3 card, is still going to be living in the same space, as a Creative/Nvid card, and will still have to be price competitive. You'll just have to spend a little more time comparing specs, and seeing who has a better total package, and not just comparing 2 functionally identical cards to see who has the best price.
  • No taco bell where I am (western australia) but I take your point. Although, I seem to remember reading this story somewhere.

    It may have been in a book called 'The Way of Strategy'.
  • I mean, nothing against them, but the only time I've ever seen S3 cards are bundled with pre-built computers. (Actually, on motherboards. And granted, that's a lot of video cards/lil' onboard chips.) But who would buy an S3 if it wasn't bundled? Is it just because they're so cheap?
  • 3dfx felt that the squabbling between the manufacturers was hurting sales more than anything. S3 is probably doing this precisely because it hasn't had a big market presence/reputation.
  • What would that be? That if you have a 'girlfriend' and break up with her, she deserves half of your freaking assests? (yes, they really are trying to get that put into law there... THATS not something I'd prefer)

  • Huh? (Score:1)

    by unicorn ( 8060 )
    You make it sound like there is some outside power that tells Creative, and Diamond what boards to make, and how many of each.

    I'm sure that Nvidia probably didn't notice a huge shift after STB got bought out. But I'm willing to bet, that when there is only 1 major manufacturer pushing their cards, Nvidia WILL be hurt.
  • Hope So, i'd hate to see 3Dfx get any more power than they already have.

  • Here's why they're buying Diamond (Score:2)

    by Anonymous Coward
    Don't forget a few months ago 3dfx tried to buy Diamond instead of S3.

    But the deal didn't go through so they decided to buy STB instead. If people are wondering why S3 is buying Diamond just go back about 4 months and read all the interviews with 3dfx spokespeople about why they were buying STB.

    OEM deals are where the money is and it is difficult for a chip company such as S3, nVidia, and the old 3dfx to get design wins with companies like Dell, HP, etc.

    ATI made crappy low end junk but had the most market share because of all the OEM deals. They gave the OEMs what they wanted, a guaranteed supply of low cost boards along with excellent support.

    OEMs don't care about the absolute fastest thing, they need a guaranteed supply first and foremost.

    S3 realizes that in order to compete with the integrated chip/board companies like Matrox, ATI, and 3dfx/STB they need to sell boards as well.

    nvidia knows this too, it's just a matter of time.

    There is one other reason for S3 to buy Diamond. One of 3dfx's reasons was faster time to market if you build the boards yourself but the reason reason is more $$$ from OEM deals.

  • Damn... now who sels NVIDIA? (Score:3)

    by Booker ( 6173 ) on Tuesday June 22, 1999 @05:18AM (#1839727) Homepage
    Great... now that NVIDIA seems to be one of the leading 3D hardware providers to support Linux, who's gonna actually make the cards? STB? er.. no, 3dfx only. Diamond? Nope, they're an S3 shop. Guess that leaves Creative, and all of the taiwanese clone boards. For one, this means less competition for NVIDIA-based boards, so I assume that Creative will be free of some price pressures. Damn... wonder how long 'til Pepsico buys 'em all.
  • It used to be that the silicon makers made silicon, and the board makes made boards, and everything was happy, people cooperated with one another, and the shelves and Best Buy were filled with a myriad of choices. Each board manufacturer made its own implementation of a graphics chip, and you could pick and choose which one was the best deal.

    Now, each board manufacturer just makes cards with their own chip. No more cooperation, no more choice. Want 3dfx? You have to buy STB. Want S3? Well, now you'll have to buy Diamond. Of course, this does not bode well for XFree86 developers, trying to keep up with changes in technology. Developments like this are only going to encourage concealment of design specs *cough*ATI*cough*.

    It would be interesting if Diamond/S3 decides to enter the PC market. Collectively, they own enough products to produce an entire box - except for the hard drive and CPU. Perhaps Western Digital and Transmeta can be wooed.......

  • That's funny! STB _used_ to be one of nvidia's largest customers. However the merger with 3dfex caused nary a bump in nvidia's sales. The fact is that most of the negotiations for sales occur between chip vendors and large OEMs. It's only after the selection process that board builders are brought in to put chips on boards (These days the board makers do very little if any value add in software ). This merger will not affect the industry as much as you think, it's an attempt by S3 to appear dynamic.
  • The AC said it well - I don't have a personal grudge with PB, but I've seen enough of their hardware to know that I could build a better PC out of a stick of chewing gum and a rubber band :-)
  • I never thought S3 what that big of a company. I always thought diamond multimedia was much bigger. Where are these companies getting money?.....are they pulling it out of their ass? Send down the flames.
  • ... so the joke about selling video cards with Rios doesn't quite work. :)

    Anyway, I'm very concerned that 3dfx will be buying S3, which would mean that I have a 3dfx Rio *shudder*. Luckily I switched to Creative Labs for nVIDIA chipsets a little while ago. I guess I'll just have to get everything from Creative Labs now. (I personally dislike 3dfx due to their business practices and the whole Babbages incident)
  • There's no way 3dfx could buy S3 at the current time. They just spent a LARGE chunk of money acquiring STB, and S3 was a bigger outfit before the STB/3dfx deal. Also, one of my friends works for S3, and he says that any rumors of 3dfx buying them are bullshit.
  • When you have a lot of voting shares in a company, your feelings suddenly become important. Granted, DiamondMM doesn't care WTF I feel, but when myself and a few thousand others express similar opinions, they tend to take notice.

    RB
  • Guys, you must be confused. The Latest SavageS4 video card is pretty good at 3D. If you look at benchmarks you will see it performs up to par with others (Banshee,TNT). Even Id people have said (someone in their plan) that they like it ..
  • Isn't 3Dfx rumoured to be trying to buy up S3 right now, too?

    This could get interesting... ;O)

  • pretty much what the subject says...I don't believe this acquisition will affect the end-consumer any time in the near-future. Diamond will be run as a subsidiary of S3, but business tactics and products won't change because of it.

    *my 2 cents*
    -hajmola
    ps: i still despise S3 with a passion!
  • Is there some paper or article that can explain [attaway.org] why companies are buying eachother? Is it for tax reasons? To avoid patent licensing fees? To buy a competitor out? An excuse for layoffs? What is the rationale behind all of this? It seems like a company is a nobody if it isn't considering buying someone these days.
  • I hope you are correct in this! If they start carrying the S3 chipset instead of the nVidia.. I'm going to have to stop buying Diamond Vid cards.. and I'd hate to do that. My Viper V770 Ultra is a masterpiece }:>

    We've got on-board S3 chipset video here at the office.. and.. well.. you get a picture.. but that's about it.
  • Who else out there thinks
    there will be one huge company
    someday?

    GlobalCo or some such nonsense.

  • Not surprising. (Score:3)

    by Stiletto ( 12066 ) on Tuesday June 22, 1999 @04:27AM (#1839751)
    Why? Not a difficult question to answer. Same reason why 3dfx bought STB... Chip manufacturers want more control over the final product. When you only make chips, it's up to the whim of the board manufacturer what size/type of memory to use, what clock speed, what features, etc. S3 must be realizing they can put out a better total package if they have control over the entire path from the chip to the monitor plug.

    It will be interesting to see how these new "uber-companies" compete with companies like ATI, Matrox, etc. who already do the chips and boards by themselves.

    If these board company buyups prove to be successful, watch for other chip-only companies like nVidia, etc. to follow the lead.
  • ...Diamond Multimedia bought the German
    graphics card developer Miro.
  • S3 has had problems recently - maybe they are raiding the company war chest to shore up their position. If you've got it, spend it.
  • What's wrong with providing hardware for the cheaper computers? I do not quite understand your logic of hating them. Could you explain, or do you have some kind of grudge against Packard Bell?
  • Well, I look at most S3 chipsets the same way I look at cards with Trident chipsets. They're cheap, they're fairly reliable, and they do the job if you don't want to do anything graphics-heavy. But, compared to most other chips out there, they downright suck. They're slow, and often have slight issues (I used to have pallete strangeness all the time with my S3 ViRGE/VX based card).

    All in all, if you're building a cheap box that is going to be in console mode 90% of the time and just the occasional jump to X for a quick tour with Netscape, they're fine. Otherwise, get a better chipset.

  • I found reason #428 [s3.com] why not to like S3 :-)
  • Will someone ple3ase enlighten me in what's wrong with S3 chipset? I used it quite a lot and never had any problems.

    Jeld The Dark Elf
  • Who else out there thinks
    there will be one huge company
    someday?

    Can you say, "Microsoft?"
    --

  • What's wrong with S3? (Score:3)

    by John Fulmer ( 5840 ) on Tuesday June 22, 1999 @04:33AM (#1839759)
    Nothing really. They basicly won the 2D chipset market 2 years ago with some very decent chips (Matrox was faster, but S3 was MUCH cheaper).

    Then they did a HUGE misstep with the S3 Virge 3D chipsets, which were somewhat buggy for 2D and really bad for 3D, even at that time. This caused S3's reputation to suffer greatly, and they lost a lot of the customer loyalty, from both vendors and end-users.

    The new Savage 3D chipsets are reported to actually be pretty good, performance-wise, but it is also reported that they need better drivers for Windows 9x, and I don't think that S3 has released specs for the XFree86 community yet.

  • Yeah, I have to think a nVidia-Creative marriage is in the works too, but you never know. I sure as hell didn't think S3 would've had enough capital reserves to buy ANYONE, let alone Diamond, so what the hell do I know? But I wouldn't count the other makers out yet. #9, while they make their own video controllers, have carried S3 parts in the past. I somehow doubt this arrangement will continue for long, so maybe they'll be looking to pick up some parts. Hercules, as you mentioned, has become viable again somehow, and the Taiwanese manufacturers (ASUS, Leadtek, Shuttle, et al) have some potential, so I think there is room for a couple of independents.

    Rendition was bought by Micron, btw, they aren't really dead, they're just in hibernation because they missed a product life cycle. Also, don't forget about NEC/Videologic, they should be ready to move some parts soon, finally.
  • >How long before Nvidia/Permedia/#9 or whoever teams up w. Creative leaving us with out a venue for interesting 3rd party chips such as the TNT

    TNT = nVidia

    I'm not sure how attractive Creative would be for a video processor company to buy. Isn't Creative into all kinds of multimedia products like sound cards, cd roms and such?

    But I agree overall that chip mfrs. like 3dfx and S3 buying card fabricators will probably mean less choice and for consumers, less competition which could mean lower quality and higher prices (lower value) for customers. Right now when a chip like TNT2 comes out, I can look around and see which card mfrs. have the better drivers, software bundle, added features and price. It would stink if that goes away.

  • I have one of those wonderful S3 Virge/GX cards and it's the biggest piece of crap I've ever owned. I always had problems with games until I bought the Voodoo2 add-on so that it could handle the 3D. Everything I've read about their chips in respect to 3D has been *very* dissapointing. BLAH BLAH BLECH!
  • Yeah, this pretty much marries nVidia and Creative, since they are the only standalone board/silicon manufacturers left. Only, as good as their sound hardware is, I am not the biggest fan of Creative video cards. Or CD-ROMs, or modems...
  • > Isn't Creative into all kinds of multimedia
    > products like sound cards, cd roms and such?

    So is Diamond.
  • Well, your experience with diamond is much different from mine. I have never had a diamond product whose drivers worked well *Except* their cards with the S3 chipsets on them.
  • Diamond uses S3 chipsets on some of their cards already. I have had zero problems with S3. I however am not real sure that this is a "Good Thing" but you sure sound full of (F)ear (U)ncertainty and (D)oubt.
  • Does anyone remember the old tv show "Dinosaurs"? It was all pupets or people in costumes. It had a company that was THE company, period. No other companies existed. Their add's were "Why? Because We Say So." Doesnt it look like thats what we are heading too?
  • True, not a fair comparison. When I got the card it was part of a $3000 PC (before I started building my own) that was supposed to be a 3d-accelerated multi-media machine. Probably true that this was mostly the fault of Gateway for putting this card into a machine to do something it wasn't capable of, I still thought it was a piece of crap.

  • We might all be working for an American Company owned by a filthy rich person in Redmond, Washington. You wouldn't have to worry about competition or big brother, but just the "man."

    His company would be tight with the military and star wars defense system. He would know where your house is. If you do not use his operating system [32bitsonline.com], he will have other ways to control you. Your silence will always be appreciated.
  • The only unreliable part of my Linux box is the pesky S3 virge that my roommate pawned off on me - random locking in X is the main problem. I'm eagerly awaiting my V770, at which time the Virge will be boxed up and thrown in some dark corner.
  • I can't understand this kind of bussiness movements.
    What is S3 buying anyway? Diamond brand?
    WHat Diamond have that s3 needs to buy?
    Because I feel that S3 have the tech skills to develop any product they want. And at 10% of the price of Diamond acquisition, they can take S3 brand from a OEM level to general public.
    SO where's the deal?
  • Companies buy each other to increse their diversity. Say your company sells pig ears for dogs to eat. Now say that vets find out that pig ears are not safe for dogs to eat; your company is screwed. However, if your company also sells fluffy animal toys, you have that to fall back on. Also, the combined revenue generated from the diversity gives a greater pool to distribute amongst the other companies. If the fluffy toys aren't selling that well, they have revenue from the dog ears to fall back upon [as long as they're safe]. That's all I remember from my economics class. :)
  • Companies buy each other to increse their diversity. Say your company sells pig ears for dogs to eat. Now say that vets find out that pig ears are not safe for dogs to eat; your company is screwed. However, if your company also sells fluffy animal toys, you have that to fall back on. Also, the combined revenue generated from the diversity gives a greater pool to distribute amongst the other companies. If the fluffy toys aren't selling that well, they have revenue from the dog ears to fall back upon [as long as they're safe]. That's all I remember from my economics class. :)

    Diamond sells more than graphics cards, and I guess that's the logic behind S3's decision. Otherewise, I have no clue.
  • Its just you.
  • Nvidia buys Creative Labs?

  • STOP THE PRESS!! (Score:3)

    by Keith Russell ( 4440 ) on Tuesday June 22, 1999 @06:24AM (#1839791) Journal
    From ZDNN:
    Diamond shareholders balk at S3 deal [zdnet.com]
    The full story should be very interesting.

    Keith Russell
    OS != Religion
  • watch out for bitmaps of black helicopters, doodz!
  • Forget the RIO. Perhaps now S3 will release the specs on the diamond cards so that folks can right good linux drivers for them? S3 support has, thus far, been very good.
  • The S3 Virge did what it was supposed to do... provide graphics for the ultra low end. Comparing $20 video cards against cards that, well, don't cost $20 is hardly a fair comparison.

  • Stupid (Score:1)

    by Vryl ( 31994 )
    I am not sure if it is true (if not, then take it as a 'parable')

    I think that Pizza Hut bought Pepsi a while ago. Or was it the other way round?

    Anyway, all the other fast food ummmmmm . . . "restaurants" stopped using pepsi and moved to coke.

    Otherwise, they would be financing a competitor.

  • Well, at this moment Im glad Ive waited to upgrade from a TNT to a TNT2! Though my strongest choice would be the Creative TNT2 Ultra, the Diamond V770-Ultra would have been a second choice. But then again, what if we had a TNT with compresed textrures combined with some of the other neat features of the S4?

    Oh well, it's not like you can win at this game anyway, upgrading is like tic-tac-toe the other side is always equaly good and it all ends in a draw.
  • If you look at all the new tnt2 ultras it seems that hercules cards actually run at the promised 175mhz where everyone else runs at 150. After overclocking, the hercs can at average get to 190 as opposed to the diamond 170 avg oc. Coincidence?
  • This will put enormous pressure on nVidia, as they are the last major independent graphics chip provider left.

    Two years ago, who thought that would have happened. After the failed NV1 nVidia was on the ropes and was a small also-ran up until the TNT came out. They missed the Voodoo 1 and Voodoo 2 era, and now everyone else is gone.

    I too was looking at a diamond TNT2 Ultra board but I assume that they won't be carrying anything but S3 video products from now on. That's a shame. I am looking for Creative Labs to buy nVidia as well, unless nVidia pulls some trick out of their butt.
  • The reason I would do Buy Diamond if I ran S3.

    Back when the S3 Virge was the hot Low end 3D chip I worked at a PC shop that sold Generic no name Virge based cards for $1,600 and Diamond Stealth 3D for $ 4,999 ( These are Jamaican Dollars so the numbers look funny :). The cards were technically identical except that the Generic board had more stable drivers and 4 megs of memory. ( vs the Diamond's 2 megs ).

    Lot's of people asked for the Stealth and bought it even after seeing the boards running side by side in identical systems on our demo shelf ( The $1,600 price on the Generic board left us with more profit ).

    Generally, the people who bought the Generic board installed it themselves. The ones who bought the diamond paid $950 to put it in. Want to guess where they got the impression that the name "Diamond" was worth a few extra Dollars ?

    PS : We had no video cards returned while I was there. Modems, Hard Drives and Monitors came back all the time though.
  • Yeah, but this is just the opposite. Almost surely, most of Diamond's quality video products will disappear. S3 is digging themselves deeper into a hole, and REALLY screwing Diamond. Diamond has always had a good rep for high-performance 3D cards. How is this possible when you're owned by S3, one of the worst chipset vendors in the world? Not only are they anemic, but they're buggy. (Causing no end of troubles for 3Dfx and Bt848 TV tuner users.)
  • There probably go the rebates I've been waiting 6 and 8 months for from Diamond.
  • > Maybe they'll bundle Rio's with video cards or something.

    Hrrmmm... Well, since Diamond already makes video cards (just got my Viper 770 Ultra last month) they could have done this bundle without S3.

    I'm not real excited about this because I'm very happy with Diamond (good hardware, great drivers) and my previous experience with S3 (Virge, need I say more?) was bad.

    When companies get bought like this, it seems the reasons are to get an instant market share boost (Diamond seems to have a very strong presence in the 3D accelerator market) and to take advantage of 'synergies' - which usually means eliminate overlapping staff. Unually it is the company being bought where the 'overlap' is eliminated.

    I don't have anything concrete to back this up, but I'm just uneasy that this move is probably in the best interest of S3 stock-holders (if they are even public?) and not in the best interest of customers who already own Diamond products.

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