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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: saukriver who wrote (20709)3/19/2000 1:54:00 PM
From: Brian K Crawford  Read Replies (1) of 54805
 
Re: ORCL, MSFT and the Law of Large Numbers

Some rambling thoughts:

1. The familiar technology adoption curve has a sharply upward sloping pattern that eventually tapers off as the market demand is satisfied and penetration approaches its limit.

2. Market leaders typically grow share faster than the market itself is growing.

3. A company's market cap potential is limited by the size of their chosen market(s) and their execution.

Therefore, tell us the size of the markets a company will dominate in, and we can begin to guess the limits on its exponential growth. It is the size of the market that sets the limits, not the base that the company starts from.

It seems to me that this set of realities is the essence of Gorilla Game investing. When a company can repeatedly defy accepted thought that says "you can't keep on growing that fast" you get the outsized returns that astound.

You may be saying: "So what? That was obvious. What's your point"?

Here it is:

MSFT is the gorilla in desktop operating systems. No longer a tornadoing market.

ORCL is the gorilla in internal, client-server based databases. No longer a tornadoing market.

Internet accessible storage is in a tornado, and the ultimate market size looks huge.

Neither company is yet the gorilla of software to store and manage internet generated data.

If one of them (or another...NTAP or EMC???) winds up dominating this space, and it is a gorilla game, their market cap will explode to new heights, blasting through the former assumptions about the absolute limits or the limits dictated by the "law of large numbers".

So my question to the board: is the software side of data storage for and on the internet likely to be a gorilla game?

And who is the likely winner?

Brian

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