To all:
The art of investing to stitch all the imprecise information together to come up with an approximate picture about the future of a company. Because of this fuzziness (since investors don't have all the pieces of the information), opinions can be very different even on the same piece of information.
Currently, the demand of OLBs is expanding very rapidly. Simple supply and demand indicates that the supply has to keep growing to meet the demand. That's why you see many new firms coming to the market as well as the expansion of the existing firms. Since we are into long term, at certain point in the future, the supply will exceed the demand if too many firms decide to enter this sector. When we talk about effective competitive in the market place, it means that E*Trade must have certain competitive advantages over other firms.
I can see E*Trade is trying to establish certain competitive advantages:
1. significant market penetration and a large market share: this is done through marketing and advertisement.
Bottom line wants to achieve: brand recognition.
2. continue focus on R&D, anticipating changes: this is all about upgrading, scalability, reliability, responsiveness and reach. There is no question about E*Trade is doing (or attempting) to do all these.
Bottom line wants to achieve: robustness.
3. convergence: I believe this is the single most important technological trend which will affect our way of handling financial matters in the future. Simply put, convergence is the integration of all the possible matters related to personal finance globally. From doing research to personal financial planning to basic banking transactions to personal loans to mortgages to mutual funds to IPO to equity/bond/forex trading to financial news and commentary, all done in a global environment on the web. E*Trade is positioning very well in this arena.
Bottom line wants to achieve: product differentiation
4. Leadership: it must have excellent management, which understands technical and consumer trends. After all, this is the e-commerce business-consumer model. The management is adept with marketing issues, and possesses leadership skills and quick response to changing trends and even leading the charge to change the trends. I think E*Trade has done a marvellous job in this area.
Bottom line wants to achieve: market leader in the sector
The above is just my view on this picture based on all the imprecise information about the OLB sector and E*Trade, in particular. |
