Home | Forums | Article Search | Subscribe & Shop | Contact Us | Log Out Absolute Power Corrupts Absolutely . . . & Kills Companies Email This Print This View My Personal Library What's Cooking December 2008 • Vol.8 Issue 12 Page(s) 102 in print issue Add To My Personal Library Absolute Power Corrupts Absolutely . . . & Kills Companies Wagging The Dog by Rahul Sood Jump to first occurrence of: [RAHUL] [SOOD] Rahul Sood's love for computers started at the young age of 11. Much to the shock and dismay of his parents, he ripped apart his brand-new Apple //c and painted it red before turning it on. His parents’ dreams of having a doctor for a son were shattered when college drop-out Rahul founded what is now one of the most respected high-end computer companies in the world, Voodoo Computers. Absolute power can bring governments, companies, and leaders to their knees. Remember where Intel was three years ago? They were getting smoked by a smaller competitor, a much smaller competitor, who found a weakness and capitalized on it. Well, things certainly changed; Intel, humbled by its own arrogance and schooled by its largest yet tiny competitor, completely changed the way it does business. There was a time not so long ago when Nvidia was the darling of Wall Street. The company seemed so laser-focused in its execution, and it rarely missed a step. And even when it did make a mistake, Nvidia only let its competitors (OK, competitor) slide by temporarily; there was no denying that, and Nvidia’s level of innovation was beyond the competition in the graphics market. In the chipset space, Nvidia was doing some amazing things and practically owned the high-end business. The company’s chips were reliable, simple to integrate, and they only had the features that their customers wanted. The nForce was truly the Ferrari of chipsets. Then, of course, there was SLI technology, which Nvidia acquired from 3Dfx, and it was so popular among gamers that it has become the industry standard for multiple-GPU graphics subsystems. Things were going very well for Nvidia. So well, in fact, that some believe the company’s leadership became overconfident to the point where they decided to take on Intel head to head in a no-holds-barred ego match to increase their platform’s real estate inside the PC. The strategic choices that Nvidia made paved the way for one of the most brutal behind-the-scenes wars that I have ever seen in the industry. Nvidia broke one of Sun Tzu’s cardinal rules: Never take on a giant head to head, no matter how strong you think you are. Instead of looking for holes that needed filling and plugging them, Nvidia focused on growth and market domination, a risky strategy from one of the most aggressive CEOs around. Somewhere in the struggle to create increasingly competitive platforms, Nvidia lost its focus on its key competitor, AMD-ATI, simultaneously reinvigorating its new competitor, Intel. There’s no doubt in my mind that the Intel monster will come out swinging when the time is right. Intel’s chipset dominance in midrange and value-priced PCs is nothing new, but that dominance is now spreading into the high-end personal computer business. It seems now that Intel can do no wrong, and we’ve all seen where that can take a company. In this industry, as in any, it is very clear that if you take your eyes off the road and get caught in your own arrogance, you will lose. We have all been there, including my company, and in the end we became a much stronger company than we were before. Luckily for us, we did not have shareholders to answer to at the time, but in the case of companies such as AMD, Intel, and Nvidia, dealing with shareholder concerns can be just as difficult as reconciling customer issues. There are no two ways about it; Nvidia has a long road ahead of it to fix what’s broken. The company may be forced to get into the CPU business, which kind of sucks because it may cloud Nvidia’s focus in other areas. On the other hand, with some strategic acquisitions the company may come out on top again, and I am excited about Nvidia’s push for visual computing. I think it brings much-needed value to the high-end GPU space, and it may bring seriously needed value to the multi-GPU space, as well. Hopefully next time Nvidia is riding high it will remember where it came from and the reasons for its success. These, of course, are my own personal views and not those of the company I work for. Signing off until next month . . . . 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