It’s been awhile since I have written an industry update so I thought I would end 2006 with some 2007 predictions. Keep in mind; these predictions are simply open predictions based on my own personal hypothesis – nothing is written in stone of course, but as per my usual style I leave my opinions in the open.
Samsung or Hitachi should/will acquire Western Digital: I think Western Digital, being the #2 hard drive manufacturer in the world (maybe a distant number 2, but still number 2) is a prime target for acquisition. I ran the theory by Charlie from the Inquirer sometime early last year and he wrote about it without the complete explaination. Perhaps I will expand on it later - but for now here are a few points;
I think it would benefit Samsung or Hitachi to acquire Western Digital because they could really use the brand penetration that Western Digital has garnered in the enthusiast PC space. I have written before about the “halo effect” that’s driven by the enthusiast community, so there’s no reason to explain the reason for this theory. WD is also doing pretty well in emerging markets and emerging vertical markets. As far as I understand Samsung has a goal to be #2 in the hard drive space by year end 2007 – that said the only way they can do this is to make an acquisition or grow their storage business at an unbelievable rate. By the way, I think Western Digital drives are pretty awesome and even though Seagate owns a ton of I.P. Western Digital keeps coming up with new and innovative ideas. They helped turn a commodity into a “sexy product”. It should also be noted that I own Western Digital stock, although I own it because I believe in it – and this opinion is purely based on my beliefs.
NVIDIA will not be acquired by Intel, but...: Nvidia will work feverishly on a strategy to remain ahead of the curve in the mobile space. It’s unlikely that they will allow Intel to “acquire” them simply because the cultures are like fire and water. I think the *only* way and Intel + Nvidia marriage will work is if Jen-Hsun remains CEO of the entire entity and they do a reverse takeover of Intel. That’s not likely to occur, but if the shareholders of both companies feel it’s a good move then it’s a possibility.
It’s more likely than not that Nvidia will build their own solutions and ultimately there will be three huge companies competing for silicon real estate. Eventually we may even see AMD and Nvidia get even closer - or not. I think it depends on how Intel handles the situation.
AMD will see better days in the future: Intel’s sudden onslaught of technology caught AMD by surprise. There is no way that AMD expected Intel to come across with such aggressive technology so quickly. AMD needs to clean house, make changes soon. They need to get ATI integrated into the machine as quickly as possible. The sooner ATI and AMD “fuse” the sooner they will create new and innovative technologies that everyone needs. Margins will eventually go back up and revenues will be strong – but until then we’ll see AMD margins drop. I don’t think it’s a pretty situation for the short term – and I’m really looking on the horizon for AMD to do something spectacular again.
ATI should really be proud of the Nintendo WII as a marquee product. ...but unfortunately such products don't pay the bills, so ATI needs to aspire to clobber Nvidia one day. I'm optimistic that AMD management will help ATI go down the right path to performance.
Intel will open up on 11 cylinders: It looks like Intel is in the position to open up on 11 of 12 cylinders. Their products will use less power, and they will continue to perform favourably. Short-mid term for Intel looks fabulous - of course the AMD+ATI thing probably has them worried, but leave it to the engineers in Israel to come up with a solution and I think we're in for some more surprises. I think Intel will try to push more "Centrino/Viiv-like" standards to the market, we'll see how that works out for them. I believe they will cut some more heads from the company, and they should take a page out of Mark Hurd's book to become a more sales-driven organization.
Something is happening with Lexmark, what I have no clue: Lexmark is still on the climb. I wrote that I thought they would make a possible acquisition, but damned if I thought it would continue to go on a vertical climb before that happened. Does anyone know what happens when a company climbs too high based on rumours beyond a reasonable value for an acquisition? That’s not a rhetorical question either, if anyone knows please feel free to pipe in.
Dude! You’re getting a real gaming system: Wait and see. Good things take time, and we’re not prepared to launch things overnight. We’re bringing in some serious muscle to leave zero doubt that this acquisition was the best move both companies could ever make in the space.
Nintendo will sell more WII's than they could ever dream of: Try playing Madden on an XBOX 360 at 1080i, then play the same game on a WII at 480. Need I say more? There's clearly no comparison, and Nintendo figured out how to invoke deep emotions from console gamers. This is a category killer. Sony should be afraid, very afraid.
Apple should license OSX: If Microsoft Vista Ultimate is ~$400 and Apple OSX is $40 there is clearly an imbalance here. Wouldn't it be interesting if Apple opened up their OS to a select few manufacturers? I think so.
2007 Special Request: I would like to make a special request to both GPU and CPU semi-conductor companies out there.
Please keep power limitations at the top of your priority list! I can’t believe we’re approaching 1.2 kilowatt power supplies, it’s getting insane. These supplies are drawing as much power as the wall socket can handle. There are management at the top of certain companies that think customers in our space “could care less” about power, and this is not true at all.
Power is a very important consideration for enthusiasts! Noise, reliability, thermals, overclocking, it’s all part of the package. We aren’t interested in loud-ass PCs – and even scarier is when liquid cooling is becoming standard because we are left with little choice! I'm a believer in liquid cooling, in fact at one point I was a significant shareholder of Cool-It technology. I don't believe liquid cooling should be a forced standard -- it should be installed to enhance the overall experience/performance - and not to "cool the shit out of the hardware" because it needs a power station to operate.
That said, it’s likely that liquid cooling will become a necessity in the enthusiast space as long things continue down the current path.
The winner of this battle will be the company who eliminates that trend and continues to go down a lower power path. You’re just going to have to trust me on this. If you can take overall system power down while delivering similar or better performance than your competition at higher power then you’ll be more successful.
That’s my story and I’m sticking to it.
For more of Rahul's thoughts, check out rahulsood.com.
