PS: Rambus may be a gorilla in the making; witness its sales growth of RDRAM the past 6 months; Sony, Intel, Toshiba, NEC, EMC......pretty good value chain.
Hi Apollo. As you know, I'm very enthusiastic about RMBS' prospect. In fact, aside from 1/2 of my IRA (in NTAP), and a whole hunk of MSFT, it's the only company I own right now (although I sure wish I'd bought some JNPR back at 30...).
But I do not think that RMBS is a Gorilla in the making. From my perspective, RMBS has a very profitable position in an open proprietary architecture, but they don't have control over it (even though they invented it!).
Gorillas get to suck a huge bunch of profit out of their value chain, and they also have lots of weapons at their disposal to fight off potential competitors.
The problem is, RMBS can suck a lot of profit out of the DRAM industry, but I don't see how they can prevent a new, better standard from taking hold N years down the road (say 10). I think the next next memory standard will win because of technological superiority, not because of backwards compatibility--just as RDRAM looks to beat DDR-SDRAM, which is more compatible with the current dominant standard (SDRAM).
Basically, defining the dominant architecture isn't enough. If you don't also create and sell the specific products that enable that architecture (like INTC & MSFT), you have severely diminished capacity to force the value chain in a new direction by will alone. You're too much at the whims of your OEM's to support every new design you come up with (rather than just using the previous one), and it seems like you're also the whims of competitors who define new extensions on your architecture, and patent those extensions. If they do that, and their extensions become widely adopted, do you still control the architecture?
Anyway, I think RMBS has a good chance to have profits of $1 bil+ a few years from now, but I don't think there's any guarantee that their profits don't fall off a cliff, say, 10 years from now. For this reason, I don't call them a Gorilla. I call them a Leech. |
