Rahul's Predictions for 007

It’s been awhile since I have written an industry update so I thought I would end 2006 with some 2007 predictions. Keep in mind; these predictions are simply open predictions based on my own personal hypothesis – nothing is written in stone of course, but as per my usual style I leave my opinions in the open.

Samsung or Hitachi should/will acquire Western Digital: I think Western Digital, being the #2 hard drive manufacturer in the world (maybe a distant number 2, but still number 2) is a prime target for acquisition. I ran the theory by Charlie from the Inquirer sometime early last year and he wrote about it without the complete explaination. Perhaps I will expand on it later - but for now here are a few points;

I think it would benefit Samsung or Hitachi to acquire Western Digital because they could really use the brand penetration that Western Digital has garnered in the enthusiast PC space. I have written before about the “halo effect” that’s driven by the enthusiast community, so there’s no reason to explain the reason for this theory. WD is also doing pretty well in emerging markets and emerging vertical markets. As far as I understand Samsung has a goal to be #2 in the hard drive space by year end 2007 – that said the only way they can do this is to make an acquisition or grow their storage business at an unbelievable rate. By the way, I think Western Digital drives are pretty awesome and even though Seagate owns a ton of I.P. Western Digital keeps coming up with new and innovative ideas. They helped turn a commodity into a “sexy product”. It should also be noted that I own Western Digital stock, although I own it because I believe in it – and this opinion is purely based on my beliefs.

NVIDIA will not be acquired by Intel, but...: Nvidia will work feverishly on a strategy to remain ahead of the curve in the mobile space. It’s unlikely that they will allow Intel to “acquire” them simply because the cultures are like fire and water. I think the *only* way and Intel + Nvidia marriage will work is if Jen-Hsun remains CEO of the entire entity and they do a reverse takeover of Intel. That’s not likely to occur, but if the shareholders of both companies feel it’s a good move then it’s a possibility.

It’s more likely than not that Nvidia will build their own solutions and ultimately there will be three huge companies competing for silicon real estate. Eventually we may even see AMD and Nvidia get even closer - or not. I think it depends on how Intel handles the situation.

AMD will see better days in the future: Intel’s sudden onslaught of technology caught AMD by surprise. There is no way that AMD expected Intel to come across with such aggressive technology so quickly. AMD needs to clean house, make changes soon. They need to get ATI integrated into the machine as quickly as possible. The sooner ATI and AMD “fuse” the sooner they will create new and innovative technologies that everyone needs. Margins will eventually go back up and revenues will be strong – but until then we’ll see AMD margins drop. I don’t think it’s a pretty situation for the short term – and I’m really looking on the horizon for AMD to do something spectacular again.

ATI should really be proud of the Nintendo WII as a marquee product. ...but unfortunately such products don't pay the bills, so ATI needs to aspire to clobber Nvidia one day. I'm optimistic that AMD management will help ATI go down the right path to performance.

Intel will open up on 11 cylinders: It looks like Intel is in the position to open up on 11 of 12 cylinders. Their products will use less power, and they will continue to perform favorably. Short-mid term for Intel looks fabulous - of course the AMD+ATI thing probably has them worried, but leave it to the engineers in Israel to come up with a solution and I think we're in for some more surprises. I think Intel will try to push more "Centrino/Viiv-like" standards to the market, we'll see how that works out for them. I believe they will cut some more heads from the company, and they should take a page out of Mark Hurd's book to become a more sales-driven organization.

Something is happening with Lexmark, what I have no clue: Lexmark is still on the climb. I wrote that I thought they would make a possible acquisition, but damned if I thought it would continue to go on a vertical climb before that happened. Does anyone know what happens when a company climbs too high based on rumours beyond a reasonable value for an acquisition? That’s not a rhetorical question either, if anyone knows please feel free to pipe in.

Dude! You’re getting a real gaming system: Wait and see. Good things take time, and we’re not prepared to launch things overnight. We’re bringing in some serious muscle to leave zero doubt that this acquisition was the best move both companies could ever make in the space.

Nintendo will sell more WII's than they could ever dream of: Try playing Madden on an XBOX 360 at 1080i, then play the same game on a WII at 480. Need I say more? There's clearly no comparison, and Nintendo figured out how to invoke deep emotions from console gamers. This is a category killer. Sony should be afraid, very afraid.

Apple should license OSX: If Microsoft Vista Ultimate is ~$400 and Apple OSX is $40 there is clearly an imbalance here. Wouldn't it be interesting if Apple opened up their OS to a select few manufacturers? I think so.

2007 Special Request: I would like to make a special request to both GPU and CPU semi-conductor companies out there.

Please keep power limitations at the top of your priority list! I can’t believe we’re approaching 1.2 kilowatt power supplies, it’s getting insane. These supplies are drawing as much power as the wall socket can handle. There are management at the top of certain companies that think customers in our space “could care less” about power, and this is not true at all.

Power is a very important consideration for enthusiasts! Noise, reliability, thermals, overclocking, it’s all part of the package. We aren’t interested in loud-ass PCs – and even scarier is when liquid cooling is becoming standard because we are left with little choice! I'm a believer in liquid cooling, in fact at one point I was a significant shareholder of Cool-It technology. I don't believe liquid cooling should be a forced standard -- it should be installed to enhance the overall experience/performance - and not to "cool the shit out of the hardware" because it needs a power station to operate.

That said, it’s likely that liquid cooling will become a necessity in the enthusiast space as long things continue down the current path.

The winner of this battle will be the company who eliminates that trend and continues to go down a lower power path. You’re just going to have to trust me on this. If you can take overall system power down while delivering similar or better performance than your competition at higher power then you’ll be more successful.

That’s my story and I’m sticking to it.

Voodoo Lounge will be at Pure this CES

I decided I would spend the next few weeks in Calgary due to all the travelling that's been going on. I setup my 30" display with an OMEN system at my house for the holidays... and I'm setting up a gaming room as well.

It's almost that time of year again. CES is just around the corner in Vegas, and we're preparing ourselves for the show. As we all get booked up every CES it's always nice to know where the best parties are going to be - and on Sunday there is no better party than the one we're hosting.

On Sunday we'll be at Pure Niteclub where HP is hosting a CES party - and we'll have the "Unofficial Voodoo Lounge" somewhere inside Pure. Space is limited, and so are the invitations - If we forgot about you drop me an email and we'll see what can be done.

For those of you who can't find a way into the party I would recommend you check out the HP booth - where we will have the "Unofficial HP House of Voodoo" setup. It should be pretty cool.

Custom PC Dream Machine 2006 Video

Here is an awesome video of a Voodoo OMEN in action. This is the older version of the OMEN (v1.0) in a special edition Titanium color.

The Interview with Phil

In the December issue of Computer Power User Magazine (CPU) I conducted an interview with Phil McKinney, my boss at HP. In CPU tradition they also had the columnists fill out their Christmas Wishlists.

The following is my wishlist for 2007.

1. Access to HP’s $3.5B+ R&D Lab. (Thanks, Santa!)
2. To see the U.S. Dollar get back to normal levels.
3. Nintendo Wii.
4. A new WQXGA+ home theater system.
5. A ticket to Gumball with a Ferrari F430 Spyder.
6. To wake up one day and speak five additional languages.
7. Courtside tickets to a Mavericks game.
8. To see Frank Shamrock return to the UFC and kick some ***.
9. For the Calgary Flames to win the Stanley Cup.
10. To have all spammers transported to a deserted island with nothing but Viagra to consume.

Keep in mind that this interview was written shortly after the acquisition...and for those of you interested, here is the rest of the article and interview;

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As you may already know, in late September HP reached an agreement to acquire VoodooPC. There has been a ton of speculation behind the motives of this acquisition, so rather than regurgitating what people have already written, I prepared a fairly verbose story about the history and the reasoning behind the transaction on my blog; I would encourage anyone interested to check it out.

For this month’s column, I thought it would be fun to interview Phil McKinney, my new boss and the CTO of HP’s PSG (Personal Systems Group). One of three business units within HP, the PSG consists of roughly one-third of HP’s overall $90 billion business.

RS: So Phil, we’re here now. Everyone keeps asking us, “Why HP?” Besides the fact that we can leverage HP Labs, there are many reasons and I’ve covered most of them in the blog. I’m here to ask you: Why Voodoo?

PM: Following HP’s gaming machine trail in 2004, we recognized that we needed to go about this market differently than just the normal box play. The market and customers demand a level of performance, support, and trust that would stretch any organization. When you look at the players that are out there that can bring influence, innovation, and brand, there was only one choice.

The other influence on the acquisition was the market desire for the latest technologies. With HP’s R&D, the acquisition gives HP a means to deliver breakthrough innovation in the high-performance market served by Voodoo. The technologies that are delivered in this high-end market then will eventually find themselves in our mainstream products.

RS: What kind of changes have you noticed at HP since you joined?

PM: I joined HP about four years ago. Since that time, I’ve seen HP become more responsive to market needs and the drive to create innovations that matter. Innovation for its own sake is what I call a hobby. Innovations that result in allowing a customer to benefit are the ones that matter.

RS: Do you think the Voodoo brand will get the life sucked out of it?

PM: No. HP is looking for the Voodoo DNA to influence HP and its products.

RS: What is your favorite movie?

PM: The old, original Pixar shorts (pre-Steve Jobs). I’m a nut for computer animation.

RS: I was caught off-guard when I visited your Web site (www.philmckinney.com) and listened to some of your podcasts. Those are pretty awesome man, why didn’t you tell me about them before?

PM: When I was first starting out in my career, I was fortunate to have a mentor (Bob Davis) who helped me get started and constantly challenged me to not get brainwashed by corporate think. As part of his mentoring, the only requirement he made was that I “pay it forward” when I was ready. Rather than just do the 1:1 type mentoring (which I do), I started experimenting using the podcast (back in March 2005) as way to share my “lessons learned” about creativity, innovation, and creating successful products.

The results have been overwhelming. I get regular emails from listeners sharing how they’ve applied the ideas in the podcast along with regular meet-ups with listeners when I travel.

From the start, the podcast and blog were my way of “paying it forward”; they are not affiliated or supported by my day-to-day job. I’ve purposely kept it a personal project and therefore I don’t make a big deal about promoting it.

RS: What do you think Bill and Dave would say if they were around today?

PM: They would be going nuts. From people who I’ve talked to who worked with Bill and Dave, they liked mavericks. Those individuals who pushed the organization, who didn’t accept the easy answer but instead dug into the problem and opportunity until they solved it. It also doesn’t hurt that Voodoo, like HP, started in a garage.

I have a favorite quote from David Packard: “Don’t be afraid to take risks. If you’re not taking risks, you’re not reaching far enough.”

As per my typical CPU plug, if you aren't a subscriber and you like to follow industry trends - this is the magazine for you.

What, Me Manipulate You?

In my latest article in CPU Magazine I wrote about the Halo Effect and how when put to good use - it can be highly effective -- but when abused it can be an absolute disaster.

Sometime in early 2005 Voodoo started to change the way we interacted with our suppliers, our customers, and the media. I also started a blog in order to reveal some of our greatest challenges and assert our thoughts to an ever-growing public audience.

For years enthusiast companies have been used by the much larger hardware manufacturers to help sell their product into the mainstream. …ask anyone in the channel and they’ll tell you its absolutely true.

This is how it works: The big guys come up with a new piece of hardware – they work with the enthusiasts to get the hardware in system reviews immediately because they know damn well that wins equate to a profound halo-effect. The enthusiasts bite immediately and do whatever it takes to put out a review machine at any cost, risks aside. The review comes out, and hopefully it’s a good one, leading to the larger mainstream saying “Wow! If XY Enthusiast Company uses this hardware in their machine and they won this review then that must mean that ZZ Hardware Company is the best!”

It makes sense, after all the Halo effect is incredibly powerful guerrilla marketing. We are also big believers in “Halo Effect” as long is it’s constructive.

The problem isn’t in the concept, it’s in the execution; it requires manipulation and sometimes deception to the highest degree: Manipulation of the media by trying to justify certain launch dates, and manipulation of the enthusiast company to ensure that they get the reviews out just in time. The biggest loser in this is the customer who usually ends up waiting months to get a system because the hardware that was promised to us end up being “over allocated” – and everyone has to wait forever to get them. Now granted, sometimes delays are unavoidable, and we make it clear to our customers that certain hardware may cause delays in their order.

Since Voodoo was acquired by HP we are getting calls from almost everyone under the sun, including a company who has had years of trouble trying to launch ONE product. Finally they have an accessory which they are trying to get us to buy and they can’t even supply a sample (we’re talking about a $200 on a bad day accessory.) They claimed that they needed us to commit to order quantity because they “cannot keep them in stock”. It looked to me like all they wanted was a press release showing that we had “partnered” with them to make it to their next financing. Needless to say I “filed” that email where it belongs.

Sometime last year we were approached by a new hardware vendor who was interested in having Voodoo “launch” their new technology to the gaming market. Our incentive: Voodoo would be one of a handful of companies listed on their website. After review of the hardware, we realized that it was too premature to launch so we humbly declined their offer. Others jumped on board, and really in the end they ended up selling hardware to their customers that wasn’t fully baked.

Another tale of trouble was when a team of executives told us about a new upcoming platform that we should really consider selling to gamers. We got the full Powerpoint presentation, we were wined and dined, and the next day they asked if we would be interested in launching it. The funny thing was we didn’t get to see the product. They wanted us to start taking pre-orders on it without even seeing it! Are you kidding me? That’s like an 11 on the “ludicrous requests scale” of 1-10. It’s unfortunate but that’s almost the level of insanity that we reached in the industry, thankfully no one took the bait.

So who are the guilty ones? Almost everyone is guilty of some form of paper launching at one point or another. I’m hoping we can do whatever it takes to change the way the industry does business. I believe it stems from unhealthy cut-throat competition. That said, we will not launch something unless we know it’s fully baked – and we hate paper launches. Quite frankly we aren’t puppets, and we will strive to do what’s best for our customers.

If you haven't picked up your subscription of CPU Magazine yet, I suggest you do. It's a great publication.

Encouraging Words for Jean!

From the beginning of my first official day at HP I have met some pretty incredible people. There are people from the "old-school" and people from the "new-school", and it's safe to say that with their help we've encountered few challenges in our day to day work.

The one thing that strikes me is that the majority of people respond to emails at all hours of the day and night, and they're always willing to help. People like Jean, for example, always respond to requests and will go above and beyond the call of duty to help out.

I first met Jean in New York, and we actually flew back on the same plane back to California. It struck me as odd that she's a spitting image of someone that I know very well -- and it felt as if I've known her much longer than I actually have.

Jean is a fine lady, she was key in helping organize the HP New York event, and she's also helping me with some smaller stuff in Cupertino. Last night I received an enthusiastic email from Jean about one of the things we're working on -- and by the tone of her email you'd never know that in October she had a Lumpectomy, and as early as November 20th she went through some chemotherapty. You can't even describe the level of dedication and loyalty displayed by her -- talk about inspirational.

That said, if you know Jean, I would encourage you to pay her a visit while she's at work (until she takes six months off from the 20th of December), and wish her well on her road to recovery. If you don't know Jean, she has posted a blog over here called "Jean My Journey to Wellness" -- I'm sure she would appreciate any words of encouragement as well.

Jean, I'm sure everyone at work is looking forward to you returning quickly! ...and my open invitation to the world of cycling is on, I think you'll love it.