All my stock market choices are technology based. nVIDIA is a producer of video card software, AMD a provider of motherboard processors and Electronic Arts a videogame publisher. nVIDIA is an example of a decreasing-cost industry. While a rather early new comer to the video card industry, nVIDIA was showing potential from the start. Major competition to nVIDIAs foothold in the industry included 3dfxs voodoo technology and ATIs Rage.
Although 3dfxs foothold seemed unmovable, the next wave of technology to rise brought about their eventual downfall in the market. s lack of support for their next generation video cards (the voodoo4 & voodoo5) resulted in their being bought out by the nVIDIA Corporation. While nVIDIA released patches to over double the performance of the GeForce2s technology, 3dfxs patches for the Voodoo4 and Voodoo5 were riddled with flaws, resulting in performance issues for all of their customers. After the buyout, nVIDIA were now free to utilize the voodoo technology and excel in the market.
Now ready to explode even bigger than before, will be the arrival of the GeForce3; boasting results over ten fold that of previous video cards, the GeForce3 will have unparallel performance in the market. This is observed by the slow increase in the percent gain, which will rise dramatically with the release of their new board. AMD, Advanced Micro Devices Inc. , was a company entering a seemingly unbreakable market. Processor technology with a high initial cost categorizes it as a decreasing-cost industry. AMD, now the most popular provider of processor technology, came in against the multi-billion dollar corporation of Microsoft.
Microsofts Pentium processor currently held a foothold in the market; however, AMDs cheaper K-6 series (although not as powerful processor) provided an economical alternative to Microsofts more powerful Pentium II processor. With sales being lost to the more economical K6 series, Microsoft released the Celeron processor, which was widely accepted as a poor alternative to AMDs K6. However, customer familiarity with the Microsoft brand name, allowed for Microsoft to recoup some of its losses in the field, but with AMDs following rising, the K7 (Athlon) processor, took a firm hold in the field against the Pentium III.
Furthermore, the Athlon Thunderbird (the successor to the K7) has now taken a majority control of the market, by outperforming the Pentium IV in most performance tests. By observing the percent gain indicated in the chart, it is observed there is a steady increase as AMDs new Athlon Firebird board strikes the market. The brief drop can be attributed to the initially high cost of the board, where individuals will hold off on purchasing the board in hope of a lower price or a sale.
Furthermore, if someone was not to watch carefully, an individual might not realize the new technology is available, because AMD does utilize many advertising techniques, unlike Microsoft. EA, Electronic Arts, a long time developer in the videogame industry, has only recently exploded to new levels in the field. Videogames provide a strong example of a decreasing-cost industry model. By purchasing small companies and partnering up with other major companies (such as Squaresoft), EA has managed to reach all classes of the videogame industry, where before, it only had a minor field of influence.
Furthermore, EA has achieved a startlingly high level of quality in all their products, gaining an unsurpassed level of credibility in multiple domains. Gaining such a foothold in the videogame industry guarantees profits for a companys future. A strong footing in the gaming market, gains an initial interest by the consumer cliental in any future products, resulting in positive press and a general wave of interest in the companies activities. An initial negativity in the percent gain is noted, because EA decided on a very close release period on all their products.
Consequently, they gained strong recognition in the gaming community for releasing such a diverse range of entertainment titles, all of which held high selling numbers in their respective categories of Action, Sports, Adventure, Simulation and role-playing. At the root of success lies a great product. Hand in hand with a great product comes a cliental loyal to a product It can be seen in everything, from music to sports. Having individuals willing to pledge their name to a product spreads popularity faster than any commercial ever could; not to mention, it is free.
