rel4490,
Ariba is definitely paving the way for their market. The business characteristics seem sound, and fall within the framework outlined in the Gorilla Game text.
Taken from their filing:
"...According to International Data Corporation, the worldwide market for Internet-based electronic commerce procurement and order management applications will experience tremendous growth, increasing from $187 million in 1998 to $8.5 billion in 2003..."
Those are definitely characteristics of a tornado market.
In addition, their product's leverage increases as it gains greater acceptance(kind of like the Law of Increasing Returns), as indicated further in their filing:
"...Our objective is to create the leading Internet-based business-to-business electronic commerce network for operating resources. Our strategy to achieve this objective is to take advantage of the buying power of a large multinational customer base to attract leading operating resource suppliers to our Ariba.com network. We believe a growing number of suppliers in our Ariba.com network will in turn draw more buyers to our network. We also believe this growth cycle will help create a network effect, where the value to each participant in the network increases with the addition of each new participant, increasing the overall value of our Ariba solution..."
All we can say at this point is that ARBA is a contender for Gorilla status. We need to wait for the market to evolve further until one is crowned such a status. Here are the competitors for the company, again taken from their filing:
"...We encounter competition with respect to different aspects of our solution from a variety of vendors including Captura Software, Clarus, Commerce One, Concur Technologies, Extensity, GE Information Services, Intelysis, Netscape Communications and TRADE'ex Electronic Commerce Systems. We may also encounter competition from several major enterprise software developers, such as Oracle, PeopleSoft and SAP. In addition, because there are relatively low barriers to entry in the operating resource management software market, we expect additional competition from other established and emerging companies, as the operational resource management software market continues to develop and expand..."
Also of interest is the company's admission that barriers to entry are low. There may be high switching costs involved once their product is adopted, but the question is: will it even be adopted by the masses? The competition is fierce, and will get even more so due to low entry barriers.
Due to the uncertainties involved in determining the Gorilla ahead of time, it follows that the basket-approach is the most prudent stance, at least until the market gives us reason to believe that it is appropriate to consolidate into one Gorilla.
Thanks again for your post. It looks like another Gorilla Game has started.
--Rainier |
