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Technology Stocks : Transmeta (TMTA)-The Monster That Could Slay Intel
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To: ComradeBrehznev who wrote (113)1/30/2000 6:42:00 PM
From: Bill Fischofer   of 421
 
OODA loops and Transmeta

To understand the true potential of Transmeta one has to understand something about OODA loops and structural competitive advantages.

I was first introduced to these concepts by an Air Force Major who gave a lecture while I was in High School. The unlikely subject was dogfights and question was how does one win a dogfight? The answer comes from modelling the process of a dogfight. A dogfight can be modelled as a loop of four phases: Orientation, Observation, Decision, and Action. This gets a bit Zen, so let me explain. A warrior (or by extension any competitor) in a state of alert readiness is in a state of pure potential. Take any action, however, and by its very nature the commitment of resources associated with such action destabilizes that potential, requiring a period of reorientation to new circumstance. The cycle begins, therefore, with Orientation during which the pilot regains perspective. From this follows a period of Observation during which the current reality can be assessed and data gathered about threats and opportunities. Processing these observations leads to a Decision about how to proceed which is then implemented in the next Action. The cycle thus repeats.

With this conceptual background the answer to how one wins a dogfight becomes simplicity itself: one wins a dogfight by getting inside one's opponent's OODA loop. Achieving this provides one with a structural competitive edge which permits one to outmaneuver the opponent with impunity.

Translating this insight from war to business is straightforward and the implications for Transmeta are immense. By decoupling hardware design from instruction set design Transmeta has changed the groundrules and given itself a degree of structural flexibility and agility possessed by no other player in the microprocessor field. They are inside everyone else's OODA loop. Whether TM's competitors recognize this reality as the potentially lethal threat it is remains to be seen. If they do, they'll reach for the checkbook. If they do not, then TM will be a must-own IPO.
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