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ATI's Rage in the system

ATI hopes its new 3D chip, the Rage 128, will solidify its lead in the highly competitive graphics chip market.

ATI Technologies announced a new 128-bit graphics processor today as the company seeks to solidify its lead in the fickle graphics chip market.

ATI's new chip, called the Rage 128, will be essential to maintaining the company's current place as the largest graphics chip and add-in board vendor, analysts say. ATI's market share in overall desktop graphics chips has grown to 27 percent on the strength of its Rage family of chips, according to a recent report from Mercury Research.

However, competitors such as Nvidia, 3Dfx, 3Dlabs, and S3 are all nipping at ATI's heels with their own 128-bit graphics processors priced at $45 and under. And, in this market, a shift in the lead could occur quickly.

"This [the Rage 128] is ATI's next generation part. It's important to ATI now that they are in a market leadership position--they need to maintain their technology leadership to maintain sales," said Dean McCarron, an analyst with Mercury Research.

128-bit 3D chips for the second half of 1998
maker chip market
ATI Rage 128 GL games, workstations
3DLabs Permedia 3 CAD/CAM
Nvidia Riva TNT games
3Dfx Voodoo Banshee games
No. Nine Ticket to Ride 4 business
S3 Savage 3D games
Source: News.com research

After the main microprocessor, graphics chips are the most critical-and most hotly contested--piece of silicon in personal computers today. These chips handle the manipulation of images users see on their computer screens and are increasingly important as 3D games and DVD-ROM-based applications become more sophisticated and demanding.

While the main processors in most desktop PCs today can process 32 bits, or pieces, of information at a time, sophisticated graphics processors are now crunching 128 bits of data at a time for some functions and are already starting to find their way into new PCs.

ATI's new chips are due out in September, which is later than some of its competitors. However, most of these chips are arriving on the market too late to make it into PCs coming out this fall, according to McCarron.

ATI has a good chance at maintaining its momentum in the PC market because so far, the company has been able to supply chips that perform well enough st a price that original equipment manufacturers (OEMs) find attractive, McCarron noted.

Currently, the company supplies graphics chips in systems from companies such as Compaq, Dell, Gateway, Hewlett-Packard, and Apple.

While ATI hasn't always been at the top in terms of performance, they have demonstrated that companies can become powerhouses by being involved in setting industry standards, said Jon Peddie, president of Jon Peddie Associates, a graphics market research firm.

"Companies can't stay king of the hill very long in this business, unfortunately," Peddie cautions. But his firm's research does currently show them as both the number one chip and graphics add-in card vendor, echoing Mercury Research' findings.

Now, with ATI's Rage 128GL the company will try and use its momentum to power the company's first graphics card for the workstation market.

Like the game market, competition here is fierce. HP, among other vendors, recently selected the Matrox G200 for new workstations being released this month. The G200, released in June, topped Mercury Research tests among available chip earlier this summer.

So far, Intel's entrant into the market, the Intel740, has not sold as well as industry analysts anticipated. So far, only one major computer vendor, Micron, uses the chip. Intel has been acquiring, or investing, in a number of third party graphics vendors but with this new generation of chips, the Intel740 will be further behind the pack. (Intel is an investor in CNET: The Computer Network.)

Intel's next major graphics release is expected in the first part of 1999. Rather than release a cutting-edge 3D chip, however, the company will release "Whitney," a chipset with integrated 3D performance for budget computers.

Competitors such as 3DLabs, meanwhile, are working on taking some of the work away from the main processor in a challenge to Intel's motherboard hegemony. Graphics chip vendors are looking at chip designs that would take over the geometry processing--the generation and movement of the polygons that make up the outline of an object-from the host CPU, because that is the main bottleneck in graphics performance these days, according to Mercury's McCarron.

Meanwhile, ATI's chip will power three new graphics accelerator cards from ATI and will also be offered in a version that can be used on PCs main circuit board. The Rage 128 will be able to process multiple pixels in each clock cycle for improved performance and can support of up to 32MB of fast graphics memory, compared to today's typical two or four megabytes. The chip can also be used to playback DVD titles using MPEG-2 compression.

ATI said the Rage 128 GL will ship in volume starting in September and will be priced at $40 in quantities of 10,000. The Rage 128 VR for use on main system boards will be priced at $30 in quantities of 10,000. These prices are comparable to the prices of parts from other vendors.

The GL chip will be offered in the Xpert board for consumers in a small or home office setting, the Rage Magnum for OEMs and graphics professionals, and the Rage Fury for the game market.

The Xpert 128 will be priced at $199 retail with 16MB of memory while the Rage Fury will be priced at $299 with 32MB of memory. No pricing was announced for the Rage Magnum. All add-in card products are expected to ship in October 1998.

CNET News.com's Michael Kanellos contributed to this report.