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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: saukriver who wrote (36466)12/12/2000 11:27:10 AM
From: John Stichnoth   of 54805
 
Re Intel as Gorilla. They are able to define the form of the product, defining how many pins the CPU has, for instance. They've changed the form of the product several times, already, and with the P4 they will do so again. And motherboard makers around the world have followed their lead as their top priority. The SSE/SSE2 attributes are theirs, and aren't they proprietary? A significant value chain has developed around Intel's architecture. This is seen most famously by the sharp deference Dell and Compaq--the two dominant princes of the desktop market--display for Intel. Software developers "optimize" their products to run optimally on Intel's products. How better can you define Gorilla power?

btw, I'll take issue with Uncle Frank's 6-points in defining a gorilla. His list is being viewed out of context, if my dim memory is correct. His 6 points are a good description of the gorilla we are looking for. The points that require a tornado aren't inherent to older silverbacks. IBM remains the Gorilla of the mainframe, even though that segment is long past its tornado. Intel's desktop-CPU tornado is similarly fairly far along the growth curve.

The issues in deciding whether Intel is attractive as an investment is not whether it is a Gorilla. Instead, it's issues like: Are you satisfied with being in a company that is past its hypergrowth phase? Are their significant areas outside the desktop that Intel can dominate that will earn it a second hypergrowth period? Is the stock price cheap enough that it reflects the diminished growth prospects for Intel?
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