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NeoMagic quits notebook graphics market

Forced out by ATI's rather better chips

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Notebook PC graphics specialist NeoMagic is pulling out of the business that made its name, beaten off by the major 3D graphics chip companies. Instead, it's going to focus on wireless networking. NeoMagic has pretty much controlled the notebook graphics market for the last couple of years, but as market analysts cited in an Electronic Buyers' news (EBN) report point out, it's not exactly been known for its expertise in 3D. That has allowed the likes of ATI and, more recently, Nvidia and S3, to move in to the marketplace by offering powerful 3D acceleration with solid 2D performance into the bargain. ATI's Rage Mobility, for instance, has won some major design wins, and that chip, and has left NeoMagic with a diminishing share of the market. That said, according to Mercury Research, NeoMagic's products were the second most popular with notebook designers during Q4 1999, behind ATI and ahead of Trident. NeoMagic shipped some 2.1 million chips from its MagicMedia and MagicGraph families. But with weaker feature sets and performance than its rivals, as figures for this year emerge, NeoMagic's share will almost certainly fall considerably from Q4 1999's 29 per cent. "NeoMagic's 2D products were a runaway success," Mercury Research analyst Dean McCarron told EBN. "When it came time to transition to 3D products, however, it was late to market. And at the time it came to market, it was offering first-generation capabilities, when competitors were offering second- or third-generation capabilities." NeoMagic said it will honour existing supply contracts for MagicMedia 256 chips, but it will take on no further contracts so it's customers will have to look elsewhere. Wireless communications won't be neo-NeoMagic's only focus - it's also shifting toward MPEG-4 and Net-oriented system-on-a-chip products. All that suggests the company is really attempting to target the Net appliance market, but whether that's with real products or IP licences is difficult to say. NeoMagic isn't exactly moving into an empty market, and while set-top box technology is much in demand and the market has no clear leader, NeoMagic isn't in for an easy ride. Not least because the very companies that forced it out of the notebook graphics market, ATI in particular, are aggressively targeting this arena too. Still, NeoMagic will have more room for manoeuvre here, if only for the short to medium term. The consolidation that's taking place in the desktop 3D market - ATI buying ArtX, 3dfx buying Gigapixel, etc. - will soon take place in the notebook market; Trident and Silicon Motion are obvious acquisition targets. Indeed, NeoMagic's exit suggests it already has. And it's hard to imagine similar moves not being made in the set-top device space. Incidentally, it's not yet clear where NeoMagic's move leaves its patent infringement case against Trident. ® Related Stories Via buys S3 chip biz for $323m-plus 3DLabs buys Intense 3D as ATI, Nvidia breathe down neck 3dfx to grab Gigapixel for $186m NeoMagic sues Trident

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