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Technology Stocks : DRIV (DIGITAL RIVER). Get in on internet IPO.
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To: Adam Nash who wrote (2885)2/11/2000 10:31:00 AM
From: buffalogrif   of 3198
 
Adam: In many ways you're asking the pivotal question: Is diversification away from an game plan a sign of strength or a sign of weakness? Is it a natural evolution into a profitable niche or a sign of desperate casting about to find something that works? Are we talking about Sears buying and then blowing out Dean Witter and Allstate or Intel moving from semiconductors to processors?

I think it's a natural evolution and a sign of strength. When you step back three or four notches, the common thread that connects all of Driv's current and potential businesses is data base management. That's really all digital downloads are. Layer on top some customer interfaces and you have a web site. It doesn't really matter whether the customer wants to download software, music or an ebook.
What Digital River is now doing for Coors is using their established technology to automate purchases by distributors. It's data base + website + password protection. This stuff about supply chain management is, as I see it, just PR fluff to make sure the story pops up under searches for what's hot at the moment.
But what IS significant is that Digital River's management didn't say "no we don't do that". They seem to be acting like a heat seeking missile and leveraging their skills. I'm fine with that. What's also significant is that Coors very likely said "hey, we make beer. We'll outsource this other stuff".
There's a great book that outlines the opportunities which may flow from this strategy called The Innovator's Dilemma.
It gives example after example of companies starting out with business the big guys didn't want and then using a discontinuous innovation (digital downloads over broadband)to eat the big guys lunch.
Investing in these companies, almost by definition, requires a basket approach and incredible patience. We sure know all about that, don't we?
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