THINK TANK TIME!
I think it is time this board did an in-depth revue of our definitions and evaluations of Kings. I don't think that Moore explored this area in the depth we need.
JDSU is pointing up the difficulty of distinguishing Gorillas from Kings, and how we should treat them as investments.
The seminal dividing point is that a Gorilla has a monopoly, and a King does not.
This means that a King like JDSU will ramp up faster, and decline faster. However, during its climb, it means we can climb on faster, because of the shorter period in getting acceptance in the market, and, during the climb, we can profit just as well, if not better, with the same safety. We just have to watch the competitors much closer, and be prepared to bail out earlier.
There is a lot of fine-tuning to be done in the King area for investment purposes. We will be looking for companies like JDSU just as hard as we look for gorillas, and we need to define what it is we are looking for, and how much sooner we can climb aboard with safety.
A close examination of JDSU's, (and similar companies), history, to try to establish when we could have recognized an entry date, and how we would have done that, is in order, IMO.
I am going to propose a great heresy.
I think Intel has always been a King, and this is one of the reasons we have been having difficulty with our definitions.
Intel's "Achilles heel" has always been that it was forced to "second source" the 1086 chip from the start, and never had a real monopoly on it. Yes, it had control of the architecture, and others were forced to follow it as monkeys, but this was always a hardware monopoly, and could be copied immediately. MSFT never had this problem, and Cisco always was a software sale, (as the book pointed out), which was controlled by Cisco.
The reason that Intel got away with a Gorilla stance for so long was brilliant marketing of "Intel Inside" and Brand naming its chip. But the pricing pressure they have undergone the last two years is a classic royalty situation.
This pricing pressure will not happen to MSFT, CSCO, GMST, or QCOM. It would take a major innovation to overturn them, as they are true Gorillas.
I propose this as a "Salem Witch Hunt" dunking test for determining a true Gorilla.
Can they be subjected to pricing pressure? Can the company be "commoditized"?
The above ideas are not LindyBill coming down from Mount Sinai with two stone tablets, but an attempt to start some rigorous discussion of these two issues. Lets really kick around some standards for identifying and investing in "Gorilla Like" Kings, and, am I right on INTC? Prove me wrong, people!
I am now going to go get ready for a fun-filled night, dancing until 2AM in the Coconut Club, at the Beverly Hills Wilshire Hotel, to the music of "Zoot Suit Riot!" Those of you, who are going to spend another lonely Saturday night in front of your computer screen, can work on these problems.
Hey, it's not my fault your life is so empty. Go enroll in a Ballroom dance class! Go to the Theatre! Remember, "Life is a Cabaret!"
(In case any of you wonder what my "getting ready", and putting on a "Zoot Suit" is like, think of famous scene with Lee Marvin, getting dressed in his gunfighters outfit, in Wolf City, Wyoming!) :0)
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