Re: Cree and it's G&K status
Chilly, I'd like to offer an answer to differs somewhat from the other two you received. There was some discussion of CREE's G&K status on the CREE thread previously (between posts #2250-2300)that several G&K regulars participated in that you might want to review.
One thing to keep in mind with CREE is that it is involved in more than one market. For example, it produces SiC wafers (one market), some of which it sells, but most of which it uses for the production of other products in other markets (blue LEDs, RF amplifiers, etc.).
CREE has the potential to become a Gorilla because it is in a mass market involving a discontinuous innovation (production of SiC wafers), CREE controls the IPR of an open proprietary standard, and there are significant barriers to entry. It is not considered a Gorilla because this market has probably not yet crossed the chasm and an extensive value chain has not yet formed.
CREE is also involved in royalty markets (production of various products using SiC technology - blue LEDs, RF amplifiers, etc.) where there is no open proprietary standard or significant barriers to entry. Some people believe CREE is likely to become a King in these markets because the inherent characteristics of SiC make the production of these various products more efficient using SiC than other techniques. CREE is furthest along in the LED market. Based on recent revenues and the reported backlog regarding the LED market, CREE is across the chasm, in the bowling alley, and the market has just reached tornado standards.
In addition to the royalty plays, it is possible that one of these days, in addition to the Gorilla market for SiC wafers and various royalty markets, CREE will stumble upon a Gorilla market for a product using SiC technology. An example might be the blue laser. This is an example of an increasingly complex product that begins to rely upon the inherent characteristics of SiC. However, this is not yet a whole product or across the chasm.
There are questions marks about whether CREE will achieve either G or K status. SiC technology and the related products like LEDs are substitutes for products that are already produced and have established markets. Therefore, the barriers to entry are not extremely large at the moment. For example, someone can use a LED made by CREE, an LED made by someone else, or they can use a light bulb. Such a substitution threat means CREE may never achieve King status in a relatively simple market such as LEDs. Over time, however, it is possible the barriers to entry might become more significant as the applications of CREE's technology become increasingly complex and increasingly reliant on the inherent characteristics of SiC and as the value chain members "design in" CREE's products. |
