The resignation of CEO Greg Ballard, which will officially take effect on October 31, follows recent financial losses and a failure by 3Dfx to land its share of design contracts with major PC manufacturers, especially in comparison with competitors such as ATI Technology or Nvidia.
Because of the low cost of even cutting-edge graphics chips, deals with large PC manufacturers can determine whether a graphics chip company will make a profit. 3Dfx has lagged behind its competitors in signing these key deals, analysts say.
"3Dfx was at the top of the heap. Then they missed a design window. Then they missed another design window," said Jon Peddie, president of Jon Peddie Associates, a Tiburon, California-based consultancy. "This is a totally unforgiving market."
The recent history of Ballard and 3Dfx in many ways reflect the roller coaster nature of the graphics chip industry. In 1997, 3Dfx was on the top of the performance pile. Its Voodoo 2 chip, which actually consisted of two chips, enjoyed a cult following among PC game enthusiasts, although Ballard told CNET News.com in an interview that he didn't play PC games.
Although popular, the Voodoo 2 was also expensive and largely had to be bought separately as an add-on product by consumers. To boost sales, 3Dfx tried to enter the market for lower-cost 3D processors that get inserted into machines by computer manufacturers. The company's success in this endeavor, however, was uneven. Simultaneously, other companies brought out graphics chips with superior performance.
In August, the company reported losses of $11.5 million for the quarter that ended in July, which sent its stock tumbling. The year before, the company posted a $9 million profit for the same period.
"I have had an extraordinary three years at 3dfx, in which sales have grown from almost nothing to an annualized revenue rate of over $400 million," said Ballard in a prepared statement. "During this time we have created a dominant worldwide brand and have been the consistent leader at retail."
"Greg has contributed greatly to the success of the company, and we are sad to see him leave," said Gordon Campbell, founder and chairman of 3Dfx, in a statement.