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Subject:  Does RDRAM matter to Rambus? Date:  11/20/2000  10:20 AM
Author:  ptnewell Number:  21151 of 143734

Asking whether Rambus needs RDRAM might sound like asking whether 800 MHz is
faster than 266 MHz. That is, beyond reasonable dispute. However with the recent
success of Rambus in signing up 5 or 6 (depending on how you count) DRAM manufacturers to pay royalties on SDRAM and DDR, many have concluded that Rambus
needs RDRAM no more than Gloria Steinem needs a bicycle. A lucrative monopoly is at hand, with DDR royalties actually larger than the 1.5% believed typical for RDRAM.
I'm here to tell you that RDRAM does need to succeed for Rambus to reach full value. Yes, Rambus could and will be a cash machine no matter how the DRAM market goes. Rambus is often compared to Qualcomm, but Qualcomm does not own the patents to its rival, GSM. Rambus is in a sweet position, and should easily be worth the $200 price target Morgan Stanley Dean Winter's Mark Edelstone has assigned. If the DRAM market reaches anywhere near the ~$76 billion projected for 2002, and Rambus collects also royalties from the tens of billions of logic controllers that interface to memory (none have signed up as yet, except for RDRAM), even a very modest P/E would do it. Heck, a P/E of 10 would very likely do it.
But if RDRAM flops, Rambus might not be worth more than P/E=10. It would then
risk being seen as the parasite that the Micron-Hyundai-Infineon trio claim. Yes, I'm aware that these same exact trio in 1995 were eagerly pushing for the "evolutionary"burst-EDO instead of the Rambus-IP based SDRAM, making their current claims hollow (1). They fought hard against Intel's decision to introduce SDRAM, and Micron remains the biggest producer of the decrepit EDO technology. But if RDRAM fails, Rambus will have real trouble working with anybody and doing anything except collecting checks for SDRAM and DDR.
To see the difference between associating with success and associating with failure, look no farther than Rambus's experience with the Ninetendo64 and the PlayStation2. Primarily for reasons of marketing, the N64 was never a big hit. By contrast, the PS2 is already enormous in Japan, has been well-reviewed in America and Europe, and seems to be on the way to be a monster hit eclipsing even the original PS.
The consequences? Nintendo is going a different approach for their upcoming GameCube. Specifically, they are going with SRAM, which has certain advantages no
DRAM can equal. (But it cost more --- the GameCube will have less memory than the PS2,
yet the memory will cost far more. The cost of SRAM dwarves RDRAM).
Sony however is delighted with the PS2, and so, therefore, is the PS2 designer, Toshiba. Probably as a consequence Toshiba became the first licensee to sign up for QRSL (Quad
Rambus Signal Logic, a product even faster than RDRAM, probably to be implemented in SRAM). There are reasons to believe Toshiba is interested in QRSL for the next generation
of PlayStations, and possibly for the communications market. The point is, there is nothing like a satisfied customer to bring repeat business.
Similarly, elements of the Rambus packet-logic techniques have been implemented into a serializer/deserializer (Ser/des) device, which PMC-Sierra has licensed. If Rambus is seen as a winner, the efforts to market QRSL, and the Ser/des will both be greatly
enhanced. If RDRAM flops in the PC market, it becomes a much harder sale.
Fortunately there is reason to believe that the Pentium 4 with RDRAM will
be a hit, like the PS2, and not a relative disappointment like the N64. Of course
part of the reason lies with relative marketing power (Sony and Intel obviously having
more than Nintendo). The extremely high cost of the early AMD DDR machines
-- the 266 MHz DDR Atholon machines offered by MicronPC hit nearly $3000 before
monitor, and that with a mere 256 MB of memory -- is also promising. If RDRAM
proves to be more cost effective in terms of total system design (owing, for example,
to the lower pin count and greater ease of motherboard design) as well as faster,
Rambus's star, and stock, will rise sharply. Via and Acer are working toward lower costs DDR systems, but thus far they have simply ignored the difficulties in driving motherboard traces at radio frequencies, and have not produced a product which works.
Although the early plethora of P4 benchmarks will likely confuse many, and provide ammunition for any viewpoint desirable, these benchmarks are hardly created equal. Some test disk speeds, some test video cards, most test whether software has been written to run well with a particular processor. For example, the P4 runs 3 times faster than the 1.2 GHz Atholon on some programs (2), but much slower on others. Because it is newly released, on the whole less software is optimized for the P4. Nonetheless, it is already perfectly possible to tell just how fast the P4 with RDRAM is. It is much faster than the Atholon, even on a per clock basis. For example, on the SiSoft Sandra benchmarks of effective memory bandwidth, the P4/RDRAM system scores TWO TO THREE TIMES the level of DDR/266 MHz. Note that this software is designed to include effects just as latency, and get an effective memory availability number. RDRAM simply annihilates DDR (3). Bulletin board arguments can exist even on whether Apollo ever reached the moon; but no serious hardware designer seeing these numbers will wonder whether 800 MHz is faster than 266 MHz.
Likewise, the SPEC*fp*2000 score of the P4 with RDRAM, 558, is faster than a 1.2 GHz Atholon ON A PER CLOCK BASIS (about 46% faster with a 25% increase in clock speed). This benchmark tests a large variety of floating point computations mostly drawn from the field of scientific computation. However it has, by design, no dependency on software optimization. Thus the P4 (i850 with RDRAM) is so much faster than the Atholon that the later becomes irrelevant. It may take time for optimized software to be introduced, but the end is clear: the Atholon is not remotely competitive. Given that the AMD speed road map looks like a deceleration ramp, that situation is unlikely to change soon. The sole remaining issue in whether RDRAM wins in the market is whether Via can introduce a P4 with DDR that does not carry the same exorbitant costs as the 266 MHz Atholon does. By which, of course, I mean a DDR chipset which works, unlike the current Acer and Via DDR systems. Since PC600 RDRAM is both cheaper and faster than 266 MHz DDR, it does not look promising for Via either.
Ultimately, Rambus is trying to position itself as the means for ultrafast chip-to-chip
communication. If they succeed in doing so, Rambus could indeed be one of the most
profitable companies in the world. Their chances of doing so will rise sharply if the Pentium 4 WITH RDRAM wins in the market place. Then Intel would feel much more comfortable about turning to Rambus in the future. QSRL and the Rambus Ser/des will have a big boost in producing new significant revenue streams.
If your goal in owning Rambus at this point (price around $60) is to double or even triple your money in two years, you will probably succeed so long as Rambus can uphold its patents. If your hope is that Rambus follows the path of a Dell, Cisco, or Microsoft to become a major player in the technology industry, with a market cap to match, hope fervently that RDRAM takes a big chunk of the DRAM market over the next two to three years. There won't be any 10 baggers for Rambus in just collecting royalties on SDRAM.




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