Intel/S3 license -- a bit dated but relevant story

[James Love <love@cptech.org>]

These are a few somewhat dated (from Dec 98) stores from CNET's Michael
Kanellos on the earlier Intel/S3 deal involving graphics chips.  It
seems as though Intel has very large leverage on graphic chip makers,
who need access to proprietary information from Intel in order to
develop new chips.  In this case, Intel apparently will license this
information to some firms and not others, and with S3, Intel becomes a
part owner as well.  Reminds me a bit of the relationship between TCI/TW
and cable content providers.  Jamie

http://www.news.com/News/Item/0,4,30079,00.html?st.ne.fd.gif.a

     S3-Intel deal heralds more consolidation 
     By Michael Kanellos
     Staff Writer, CNET News.com
     December 18, 1998, 4:00 a.m. PT 

news analysis With S3 teaming up with Intel, life just got tougher for
other graphics chip companies. 

The long-predicted consolidation in the crowded graphics field took
another big step forward yesterday when S3 said it will make "integrated
" chipsets in 1999 that combine 3D capabilities with some of the
input-output functions required by Intel's Pentium II processors. 

  [snip]

The pressure point is a technology license agreement announced yesterday
between S3 and Intel. Integrated chipsets are expected to become more
popular in 1999 because they cost less than traditional multichip
solutions. To make integrated chipsets for Pentium II-based computers,
chipmakers need access to patents for the "P6" system bus, which
essentially serves as the data gateway for the Pentium II. Yesterday's
agreement gives S3 access to the P6. Not everyone will be so fortunate. 

                   
    [snip]                                        

"This creates additional barriers for other graphics players," said Rick
Bergman, vice president of marketing at S3. "Intel isn't going to do
this for everybody." 

   [snip]


-------------------------------

http://www.news.com/News/Item/0,4,30046,00.html?st.ne.ni.rel


S3, Intel in tech licensing deal 
By Michael Kanellos
Staff Writer, CNET News.com
December 17, 1998, 12:15 p.m. PT 

update Graphics vendor S3 has become the latest company to land a
technology licensing deal with Intel, a trend that may lead to the
emergence of low-cost parts for set-top boxes, information appliances,
and cheap computers based on Intel  ideas. 

  snip]

In the agreement announced today, S3 and Intel have entered into a
10-year technology cross license pact, which allows S3 to use certain
semiconductor patents and intellectual property rights. S3 has the
rights to incorporate into products the "P6" bus, which is used in
conjunction with Intel microprocessors and other technology, said Chuck
Mulloy, an Intel spokesman. (Intel is an investor in CNET: The Computer
Network, publisher of News.com.) 

Intel also agreed to purchase warrants, or options, which gives the
company the right to buy shares of S3 in the future. Financial terms
were not disclosed. 

 S3's product plans
S3 said it plans to use the patents to incorporate additional
functionality into its current graphics processor line, as well as come
out with a new series of chips for "set-top boxes, WinCE machines,
consumer appliances, industrial point-of-sale systems, and automotive
GPS systems," according to a statement from S3. 

The first products to emerge from the deal will be 3D graphics chips
that support the next version of the Accelerated Graphics Port (AGP), a
PC architecture innovation from Intel that speeds up graphics
processing. These will emerge in the first half of 1999, said Rich
Bergman, vice president of marketing at S3. "Integrated" chipsets, which
will combine 3D graphics functions as well as some of the input-output
functions handled by standard chipsets, will also emerge. 

  [snip]

-- 
James Love, Director, Consumer Project on Technology
P.O. Box 19367, Washington, DC 20036
http://www.cptech.org    love@cptech.org
Voice 202.387.8030, Fax 202.234.5176