IBM enters 3D graphics market

IBM has begun selling a high-end 3D graphics chip to outside customers, touting that it enables $3,000 PCs and workstations to use graphics once found in much pricier systems.

"This is a brand new chip. We intend to be a leader," said Satish Gupta, general manager of IBM's workstation business.

IBM is reinvigorating its drive companywide to sell electronic components as an OEM supplier to third parties. This strategy was brought into graphic relief this month in a $16 billion deal with Dell and a $3 billion alliance with EMC. Dell is slated to buy storage devices, networking components, displays, and chips from IBM, while EMC will source storage equipment.

IBM has also cut a raft of smaller deals with companies such as Hughes, DSP Communications, Juniper Networks, and Nexabit Networks.

Now, IBM will add graphics chips to its bulging portfolio. It already sells PowerPC processors, specialized ASIC chips, system-on-a-chip technologies, and memory to outside customers.

IBM is now supplying graphics circuit board giant Diamond Multimedia with the new FireGL 1 3D and 2D graphics chip. In the past, Diamond has supplied boards to PC makers such as Compaq and Dell Computer.

IBM is both designing and manufacturing its FireGL 1 graphics chips, which could make it a formidable competitor. Most graphics chips companies do not have access to their own manufacturing facilities and must take the typically more expensive route of hiring another party to do it for them.

Earlier this month, IBM announced a $3,000 Pentium III workstation with the FireGL 1 for about $3,000. This also includes 128MB of memory and 13.5GB hard drive. Gupta claims this technology from IBM was available in systems ranging from $6,000 to $8,000 only last year.

"This [circuit] board is available to distributors through Diamond," said Gupta. Diamond takes an IBM chip and affixes it to a circuit board that PC and workstation makers can buy and plug into a system. Diamond is also helping IBM with software technology such as drivers.

But IBM will have to elbow into a crowded market. Gupta said his competitors are Evans and Sutherland (E&S) and 3Dlabs, two high-end graphics chip makers which target the rarified high-end workstation market.

But IBM is also likely to find itself competing with more mainstream chipmakers such as ATI Technologies, Nvidia, and Matrox as they bring out more powerful chips.

"IBM has a decent reputation as a workstation vendor and a good--and improving--reputation as a chipmaker. The IBM name will help Diamond market the FireGL 1 to its customers, but the product will still have to compete on its merits against a wide variety of alternatives," said Peter Glaskowsky, an analyst at the Microprocessor Report.

Besides performance, IBM will also face bruising competition on price. "Though the FireGL 1 is very affordable compared to the $1,000-$3,000 alternatives--and faster than some--other vendors will also be competing on price. Evans & Sutherland's Lightning 1200 is somewhat less expensive at $700, and 3Dlabs' new Oxygen VX1 is just $299," said Glaskowsky.

Gupta claims the IBM chip is a first in this segment. "This is leading edge 2D and 3D performance and is the first-ever, fully-integrated, 256-bit OpenGL 3D, AGP solution," Gupta said. Both OpenGL and AGP are high-performance graphics standards.

IBM claims the IntelliStation M Pro with FireGL1 graphics outperformed 3D technology from Compaq, Hewlett Packard, and Dell.

Glaskowsky has some dire predictions for competition though: "The professional graphics market really isn't big enough for all of these companies. Some of the biggest workstation vendors have their own graphics products. IBM, E&S, 3Dlabs, and a few others are competing for what's left of the workstation business. It'll be very difficult for any of them to prosper under these circumstances."