On Sun, 20 Jul 2003, Allen Akin wrote:
> On Fri, Jul 18, 2003 at 06:09:44PM -0700, Mark Vojkovich wrote:
> |
> | As for the viability of a particular market, here's an example.
> | Yahoo's business section lists NVIDIA as having 1513 employees and
> | revenue over the last year was $1731 Million. This is revenue of
> | over $1 Million per employee per year. That 1513 includes everybody
> | including secretaries, etc... so there is obviously well over a
> | Million dollars revenue per engineer. One man year of extra work
> | is generally expected to generate at least a Million extra dollars
> | of revenue. If a particular market can't generate that, resources
> | are best allocated to another project.
>
> This is a good rule-of-thumb that everyone should keep in mind. Thanks for
> presenting it so clearly.
>
> It's important not to drive it too far, though. In particular, it's
> simplified in at least two respects:
>
> Opportunity. It may be that there *aren't* any million-dollar
> per-employee revenue opportunities available in the market. If you
> want to expand, you have to take the best of the opportunities that are
> available, even if that means revenue-per-employee goes down.
Correct, however, graphics hardware companies have alot of tangential
markets they can go into that hold large revenue potential. For example,
when NVIDIA needed to grow, it didn't try to collect crumbs with software
opportunities for existing hardware. It got into the core logic business
with nForce, entering itself in a whole new market. If I look at
the emerging opportunities for graphics devices: new markets in settop,
palmtop, cell phones, consoles and other appliances, I get the feeling
that there are so many markets left untapped, yet not enough resources
to devote to them all. I don't expect the current graphics hardware
companies to ever be in a position where they have to scrape the bottom
of the barrel for revenue.
>
> Financials. It takes time for engineering work to be done, and more
> time for a new market to be developed. So the whole effort needs to be
> evaluated as an investment with return over time, not just cash-flow-in
> vs. cash-flow-out.
>
> The open source community needs to address this stuff, too, if it wants to make
> a compelling business case to the vendors.
Another thing to keep in mind is that users shifting from
Windows to Linux is not creation of a new market per se. The
total hardware revenue does not increase. It merely creates more
work for the vendors as users shift from one platform to another,
and prevents vendors from being able to focus on one platform.
Hardware vendors have little incentive to encourage this
change. They actually have reason to resist it. The case of
professional OpenGL workstations I cited earlier was an
exception. This was a migration from traditional Unix workstation
hardware to Linux PCs. It was a new revenue opportunity for
PC graphics hardware vendors.
Mark.
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