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Strategies & Market Trends : Gorilla Game Investing in the eWorld -- Ignore unavailable to you. Want to Upgrade?

To: Teflon who wrote (698)	11/16/1999 2:24:00 AM
From: HeyRainier	Read Replies (1) \| Respond to of 1817

Teflon, my thoughts on EXDS as a net Gorilla: <<The issue boils down to whether a business that's focused primarily on web hosting services may have a hard time living up to Gorilla/Godzilla Game standards.>> Focus is considered a desirable characteristic according to Michael Porter's competitive strategy model (the other two Generic Strategies are Differentiation and Overall Cost Leadership), and each strategy has been shown to be effective in establishing competitive advantage. In a research report from BancBoston Robertson Stephens analyst Richard Juarez, he sited 5 different layers for the internet, with the core being the (1) components, then (2) access, (3) hosting, (4) outsourced e-commerce apps, and (5) content. It would appear that EXDS is filling the hosting space fairly quickly, and was in fact mentioned in a passing article (don't have a link) as the Gorilla in its field. I like to think of them as a Cisco of web hosting, given their role in establishing further another layer in internet real estate, and an impressive ability to hold onto those customers they sign up (e.g. 2% annual churn rate and 80% win rate for competing bids, taken from Morgan Stanley Dean Witter research report on 10/27/99, written by Camp, Flynn, and Cervantes). I make the comparison to Cisco because once companies staked their internet territory over Cisco's routers, they had little incentive going forward to relocate on a different vendor's routers. That low churn rate and a similar "if it ain't broke don't fix it" attitude is what makes EXDS plan so attractive; once the customer is there, it doesn't move away. While I have not yet analyzed in too much depth whether or not the switching costs or barriers to entry in the industry would be considered high, one could make the argument that they are building "stickiness" to their model, and it seems to me that that is one of the core necessities to making it in the web world. On the subject of barriers to entry, I consider the low churn rate to contribute to that effect. Rainier

To: Teflon who wrote (698)	11/16/1999 1:24:00 PM
From: ratan lal	Respond to of 1817

Teflon EXDS was the first to enter the Server hosting biz and garnered many of the major corps. including, I believe, GM, FedEX, AmEX and the list goes on. However a ltttile while back INTC and Worldcom among others announced that they would be investing multi billion dollars to enter this field. So the problem for EXDS is that the cost of entry in this biz is small. The cost of switching is basically nil, since any co. can have a new server transparently located ata different location and even have servers in muliple locations. The main question then remains is can INTC and others IMPLEMENT their biz plan well enough to dethrone EXDS or conversely will EXDS make sure that they stay well enough ahead of others both in terms of reliability and more offerings to keep their clients and get new ones. Remember some time back EBAY had outage and the rumor was that these servers were housed at EXDS. Finally, we have to remember that the worldwide market is exploding and it may be possible for ALL cos. to prosper. This is my humble qualitative analysis. Now we need to put numbers on these and come up with a conclusion. ratan

To: Teflon who wrote (698)	12/15/1999 10:16:00 PM
From: BI*RI	Respond to of 1817

From Global Crossing thread: By Jim Seymour Special to TheStreet.com 12/15/99 2:13 PM ET Leo Hindery, the former cable-TV chief at AT&T (T:NYSE - news), who was pushed out after repeatedly arguing that the company would be better off if it opened its system to ISPs other than its pet Excite@Home (ATHM:Nasdaq - news), moved recently to Global Crossing (GBLX:Nasdaq - news). But Hindery's neither much interested nor much involved in Global's traditional business. He's there to get its new GlobalCenter hosting business up to speed quickly, ready for an early-2000 IPO. Look for GlobalCenter to go head to head with Exodus(EXDS:Nasdaq - news), and Digex (DIGX:Nasdaq - news) and the other big hosting outfits. But also expect Hindery to deliver an application service provider platform, with his own twist. Not as an ASP itself -- I suspect Hindery is wary both of the margins in the ASP business and in the missionary sell involved -- but as a hosting center for other ASP businesses looking for reliability, speed and a little better deal than they can get from the more established firms.