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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Don Mosher who wrote (38889)2/4/2001 12:13:15 PM
From: Judith Williams  Read Replies (1) of 54805
 
Don--

Buon viaggio!

Talk about enabling technologies. The Q sending you to Bali.

I've been mulling over your thoughts and the thread responses, but am still muddled. One thought does occur to me about "virtual" network effects. While the word virtual puts me off, there is something embedded in the idea that deserves more attention.

Almost by default the thread has come to equate network effects with the value chain. I think the context may be somewhat broader when one considers the "eco-system" concept underlying network effects and the notion of critical mass or punctuated equilibrium that drives any tornado.

Take CSCO. In the current Fortune Khosla reiterates the proposition that the silverback can look forward to a leisurely stroll down Main Street with 30 to 50% YOY growth rates.

Looking at network effects in a broader context might raise some concerns. The impact a Gorilla exerts is not just its dominance, but the perception of that dominance. This effect works both within the value chain and within the investing community. A whiff of vulnerability and the jackals start circling. A case in point is the reaction to CSCO's recent announcement of the OC-192 series, meant to put whipper-snapper Juniper in its place.

I don't know enough about the technology to differentiate Junos from the OC-192 12000 series, but I venture to say in the not too distant past the announcement would have been interpreted as an obituary for Juniper. Something has changed and that change has taken place in the "perceptual" network.

--Judith
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