Spreading its resources too thin, it attempted to compensate by stretching the goals for its next high-performance chip beyond the competencies of its development process. In the last months of 2000, 3dfx closed its doors, selling its patents, brands, and inventory to Nvidia, where many of its talented engineers wound up working.
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Passing on ArtX was a strategic blunder by Nvidia. The network of human capital in this industry was sparse and well understood. Had there been many pockets of talent like ArtX, acquiring it would make no sense. But even though Nvidia did not need the extra expertise, acquiring it would deny these scarce competencies to a competitor.
THREE: New Venture
“Sun Microsystems had declined to pursue the consumer marketplace for PC video game hardware. So had Lori’s former employer Silicon Graphics, the industry leader in three-dimensional graphics. (Employees there were busy animating the CGI dinosaurs for Jurassic Park.) The failure of the major players to invest in PC gaming created a vacuum in the marketplace, which a brigade of start-up businesses was now scrambling to fill.
The concept was to take the hardware used to paint the wire-frame skeletons of model airplanes and dinosaurs and repurpose it to create controllable animated figures in three-dimensional games.
Nvidia’s frenzied six-month shipping cycle left the perfectionists at 3dfx at a disadvantage. At one point, one of 3dfx’s founders publicly speculated about declaring a truce between the two companies so that technical standards could be established before the next generation of products shipped. “That’s when I knew we had him,” Kirk said. “We were in a death struggle with 3dfx, and one of us had to die.
Despite the success, Huang remained wary. In 1996, the leading graphics accelerator firm was S3 Graphics. By 1999, it was gone. In 1998, the leading firm was 3dfx. By 2000, it was gone, too. There was no guarantee the same wouldn’t happen to Nvidia. One of the business books stacked in Huang’s office, written by Intel CEO Andy Grove, was titled Only the Paranoid Survive.
By 2012, the situation was becoming dire. Nvidia’s stock price had not appreciated in more than a decade, and although revenues and employment at the company had grown considerably, profits remained flat. Huang was bringing supercomputing to the masses, but the masses didn’t want it.