Here is Allen Benn's take on WINd's potential as a Gorilla
candidate that is very appropriate for this discussion:
Message 4175408
I am stunned by the similarity between Moore's "low-risk" investment and what has been advocated on this thread - long before he wrote either "Inside the Tornado" or "The Gorilla Game". (I always wondered when someone would suggest WIND named its flagship product "Tornado" to help customers, partner and investors see the connection. In fact, WIND's Tornado beat the book to market, so joint use of the same name is a coincidence, unless Moore borrowed it from WIND.)
There are two main differences between Moore's writings and the meandering thoughts piled up over two years on this thread. By far and away Moore's concepts are much better organized and presented, and he does a marvelous job of associating gorilla possibilities with high-tech industries, rather than fall back on over-used generic concepts like "franchise", or Buffett's "Toll Booth", or "monopoly". Second, as has been amply pointed out on this thread, and I admit, I try to spot Gorillas earlier than what may be wise for the conservative investor. Otherwise, I find little objectionable about what Moore says, and indeed find myself astonished that many of his controversial statements are consistent with my beliefs.
According to "The Gorilla Game", as an enabling technology, the embedded systems RTOS and tools business is smack dab in Gorilla territory, i.e., it lies in geography ideal for finding Gorillas. Unlike application sectors, like enterprise resource software, however, Moore recommends waiting for concrete signs of the beginnings of a Tornado before choosing a winner and investing. While the embedded systems tools business clearly has crossed the chasm, and is firmly "embedded" in his so-called "Bowling Allies", it has yet to reach Tornado proportions. I hope to explain why this has yet to happen, and what will trigger a change in the post I owe on the Microsoft threat.
Given this, why have I been recommending WIND as a potential Gorilla? Because WIND's distinctive advantages seemed probable in 1993, and highly likely starting in March of 1994. Over the last couple of years, to me at least, WIND's unstoppable advantages have become obvious. Keep in mind that Moore apologizes for recommending conservative entry points to enabling technology Gorillas, but anything more aggressive is too risky for most investors with limited technical knowledge. Stated differently, this thread has been completely consistent with concepts espoused in "The Gorilla Game", as long as you believe somehow we have managed to assess the market implications of related technology adequately.
Moore recommends selling off would-be gorillas once it becomes obvious they cannot compete against the remaining candidates, and concentrating investments in remaining candidates. This is why I have never revisited INTS or MWAR as serious investment vehicles after they both broke down in the face of competition from WIND. The remaining question is whether a Gorilla from an adjacent space (MSFT from the PC paradigm, or SUNW from proprietary computers) can capture ownership of the space.
However, at this point, with the only possibility of serious competition stemming from a Gorilla in another space, the investor can rest easy knowing that, in the worst case going forward, WIND WILL BE GIVEN significant market share, if only to counter moves by the another Gorilla. In the best case, WIND will dominant the third wave of computers, and join the ranks of world-class monopolists that dominated the first two waves.
And this thread should really enjoy the post from Allen Benn who way back in October of 1997 had this to say about Qualcomm as a potential Gorilla:
George Gilder presented his views on "Regulating the Telecosm" at the Cato Institute last spring, from which the following was lifted:
"There's been a flaw in the technology of microprocessors, the technology of sand. To get an idea of its abundance, it's worth remembering that a silicon chip is made up of the three most common substances in the crust of the earth - silicon, oxygen, and aluminum. But there is a flaw and I like to sum it up by telling the story of the car in the jungle. If you encountered an automobile in the middle of the jungle, you might regard it as quite an impressive technology, particularly if you'd never seen an automobile before. It has heat, light, air conditioning, radio communications, a big back seat, and even a loud horn to frighten off fierce animals. You might never imagine in contemplating this car in the jungle, however, that the real magic of automobiles comes in conjunction with roads. For the last 30 years or so, we've mostly used our computers like cars in the jungle. We've been using desktop-oriented applications, without ever realizing that the real magic of computers comes in conjunction with networks. Of course, we've had local area networks - LANs - but at LAN's end is a communications cliff and a bandwidth scandal, and you're back to the heavily regulated 4-kilohertz jungle of the telephone wires. The 43 million tons of copper that the regional Bell operating companies command is, I believe, essentially a copper cage. It prevents us from effectively developing the new technologies that really will define the new cellular device - the CDMA spread-spectrum personal computer."
George's CDMA spread-spectrum personal computer is contained in our EID. The EID needs ubiquitous communications, telephone wired, hard-wired, wireless, electric power based communications - anything as long as it communicates. By using the CDMA modifier, George is merely emphasizing that the lion's share of future communications needed by EIDs will be wireless, and CDMA at that.
I agree with George about cars in jungles and we agree that wireless will explode, ultimately vastly more for data communications than for voice. but in general, my position is more flexible than his about specifics - no doubt because of my ignorance of the underlying technologies. Once CDMA survived production roll-outs, I took the position that CDMA will garner a significant piece of wireless communications, but not necessarily the whole banana. That significant piece is sufficient to give QCOM, with its awesome synergy and the intellectual owner of the CDMA property, a franchise of stupendous value. Accordingly, I established a stock position in the company of sufficient size that I will feel duly compensated in future when QCOM begins to realize its potential more fully. Since then, there has never been a reason to sell, and I doubt there ever will be - although the ride will be bumpy.
As microprocessors come in conjunction with communications, spawning EIDs, the results will not only benefit CDMA, probably GSM and other communication technologies, but they will push WIND to unbelievable heights. This is the relationship between QCOM and WIND that will prove to be more important than even I2O, not any particular contract in place today. You are correct in not thinking of wireless as just voice communications, and handsets as just portable telephones. As George also said in his presentation, "Another amazing thing that happened recently was that for the first time data bits outnumbered voice bits in the telephone networks."
You should also recognize that WIND should benefit similarly from GSM providers, and indeed VxWorks is commonplace in GSM infrastructure equipment. In fact, being more mature, GSM has more available in data communications currently than CDMA, and I suspect many GSM-based EID's are in development. I wouldn't be surprised if Geoworks reconstituted its GEOS OS as an application sitting on top of VxWorks, essentially out-sourcing all low-level communications and real-time OS requirements that may occur with advanced usage, along the lines of the recently announced Adobe deal.
For the record, WIND announced it is helping QCOM flesh out the Globalstar infrastructure and satellite handsets, all due to be installed and tested next year, and then rolled out into production. However, as all wireless handsets increase functional complexity, and as 32-bit microprocessors and advanced DSPs become both needed and practical, WIND should obtain more than its fair share of traditional handset design wins as well. It would appear the Q phone adds enough functionality to require a powerful RTOS, and if not, then the next generation will. All this portends wonderful things for WIND, but its at the point where there is conjunction between the microprocessor and communications, the EID, not just portable telephones, that WIND will benefit hugely.
Message 2474577
And here is another link to Allen's musings on WINd and Qualcomm:
Message 2504034
Karim
P.S., I apologize for pasting all these posts from Allen
Benn but since the purpose of this thread is to spot a
potential Gorilla at the earliest possible stage and since
Allen has been AWOL from SI, I took the liberty of posting
Allen's thoughts on Wind's potential as a Gorilla because
he is the best person to articulate that vision.
I hope you all will understand...
KP |
