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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Mike Buckley who wrote (29308)8/2/2000 6:24:57 PM
From: DownSouth  Read Replies (1) of 54805
 
IPR per se isn't needed. Siebel, Oracle, and Microsoft don't have any IPR that prevent other companies from developing competing products. The key isn't that the IPR ties competitors' hands. Instead, the key is that a company's product is accepted as the de facto standard.

Using just that one example, it's not the IPR that is required. It's the product adoption.

Product adoption is worthless without the IPR. It takes both. Take Netscape for example. The functionality of their browser was easily reverse engineered into MSFT Internet Explorer. Netscape had 90% of the market when MSFT jumped in. (The other 10% was shareware.)

In researching my last post regarding AMD, it became obvious to me that AMD is able to compete more and more effectively with INTC because INTC does not have the IPR required to protect itself in the 32-bit market. INTC intends to correct that problem with its 64-bit architecture(s).

INTC is vulnerable now because expansion of the 32-bit market has slowed on two facets:
1) The need for faster and faster CPU's is slowing because of the internet and because memory/bus architectures are now the throughput bottleneck--not the CPU. Thus new apps requiring more CPU speed are not coming forth.
2) The need for more and more PCs is slowing as their functionality is being dis-integrated by PDA's, cell phones, and a general slow down in the market.

The result is that INTC's real strengths--the ability to design and manufacture new processor chip sets rapidly and profitably--are not the defining factors in today's market. The same thing would happen to JDSU if the optical comm market were subjected to similar dynamics.

Comparing INTC to ORCL again, no one can clone the ORCL RDBMS platform legally. Cloning the INTC 32-bit platform has been done repeatedly by several. In fact, AMD's 3DNow instruction set was so compelling that value chain formed and INTC copied that instruction set. (A reverse of the MMX example that was used to "prove" INTC's gorillaness.)
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