NeoMagic back. ATI, don't panic!

I LAST WROTE about Santa Clara-based NeoMagic more than two-and-a-half years ago. The one-time notebook 2D graphics acceleration chip maker had just announced its decision to abandon the market that had made its name - it had been soundly thrashed by ATI's mobile 3D chips. NeoMagic had great 2D technology but it came late to the 3D party only to find all the booze had been swallowed by the likes of Nvidia, ATI, S3 and others. Piqued, it walked out.

Following its change of direction - to wireless communications and multimedia system-on-a-chip products - NeoMagic promptly vanished off my radar screen. Until t'other week when a press release announcing its next-generation chip architecture wafted into my in-tray. Curiosity pricked, I decided to take a closer look.

NeoMagic's wireless comms aspirations have fallen by the wayside in the years since April 2000's strategic shift, but its interest in multimedia SoCs has continued, albeit with an increasingly mobile focus. Last month, it began shipping its latest, the MiMedia 5, in sample volumes. The MiMedia chips are ARM-based parts, geared toward smartphones based on a variety of operating systems, the best-known being Windows CE, Symbian and Linux. NeoMagic gave its official thumbs-up to Windows CE-on-ARM platform at a joint Microsoft-ARM Executive Summit in September. The telling omission from NeoMagic's list of chums is Palm, of which more later.

Alongside the MiMedia 5, NeoMagic announced its next-generation architecture, Associative Processor Array (APA), designed to deliver high performance multimedia apps without draining the battery twice as fast as less sophisticated parts.

APA's key innovation is integrating more memory onto the die and doing the processing on that memory - to perform "bit level processing within an array of memory cells", as NeoMagic puts it itself. In essence, that means the chip doesn't pull in data bit by bit and process it sequentially, pipeline fashion like traditional CPU architectures. Instead, the core reaches out and operates on array data structures held in the on-die cache. So there's far less time wasted shuttling data around the system. APA performs multiple processing steps on the cached data and saving interim values as needed without unloading or reloading the data. When the processing of the data is complete, it can then be returned to main memory.

The upshot, claims NeoMagic, is the ability to do a darn sight more processing per clock cycle than traditional processors can manage at lower power. That, the company reckons, puts it at a distinct advantage over rival architectures based on CPU/DSP combos, such as Intel's Personal Internet Client Architecture (PCA) and Texas Instruments' Open Multimedia Applications Platform (Omap), both of which are also based on ARM core technology.

NeoMagic's favourite application for its new architecture is MPEG-4 decompression, which allows mobile devices to play back full-motion video. But it's got its eye on other digital imaging apps, including 3D graphics, curiously enough.

So need ATI and co. start panicking? Not just yet. NeoMagic's upcoming technology may be impressive, but its existing products in the MiMagic family don't seem to have set the market alight. NeoMagic's latest figures, for Q3 2003, posted this past week, show rising sales: $655,000, up from $83,000 in Q3 2002 and $494,000 in Q2 2003. But it lost $12.5 million. It's got a lot of cash in the bank - $74.3 million at the end of the last quarter - but that won't last long at the current burn rate.

The trouble is, NeoMagic is betting on major growth in the PDA market. Its forecast very bullish sales: 60 million PDAs by 2006, along with 40 million personal entertainment devices and 50 million smartphones, according to a report over at iApplianceWeb. That's a lot of kit and a very high growth rate for a market that shipped just 2.44 million PDAs last quarter, according to IDC, on the back of slowing demand.

PalmOS continues to dominate the PDA market, according to IDC, and yet NeoMagic has no partnership with PalmSource. Yes, Palm has only just shipped ARM-based product, but its strategy to shift PalmOS to that platform has been public knowledge for a long time.

PalmOS 6.0 is expected to focus strongly on mobile multimedia. Without an tie-in with the Palm or its licensees, NeoMagic - for all the undoubted cleverness of APA - may well run into problems. If it's not careful, it might have to announce its retirement from another market. µ