Since reading Inside the Tornado, it has become my favorite 'big picture' resource for understanding the technology industry. I, along with all of you who have read it, highly recommend this as an additional read as we move forward in our discovery of 'other opportunites' - as Mike calls it. There are 'other opportunities' and will continue to be 'other opportunities' in the future. Tornado, IMO, can only help to facilitate our expertise at uncovering these future opportunities as well as serve as a barometer for management decisions in the tornado.
Not only does the book speak to gorilla games, but also is very real for royalty games as well. The eggs in one basket approach that many companies pursued is well documented in the book. One of my favorite strategies in the book comes from pages 78/9 and is entitled "Ignore the Customer". Talks about during the tornado it is important to ignore the customer. The customer simply wants to be supplied. "That is why Henry Ford not only could say, but was correct in saying, 'You can have any color Model T you want as long as it's black.' " Discussions of decisions made in the bowling alley and in the tornado for companies like Apple, Dell, Sun Microsystems, Compaq, HP, Microsoft, Intel, Gateway and others reveal that rather than 'winners and losers' being the norm, there was a lot of 'dealing with the hand you were dealt' management decisions that were not mistakes, but rather wise strategies to target various niches and tornado markets that did exist for each company.
In face, there is a whole section entitled "Was Apple's Macintosh Strategy a Tornado Mistake?". Moore argues that Apple's strategies were not a tornado mistake, but rather a wise decision to pull out of the business sector PC tornado when IBM entered and instead, Apple established itself as a strong niche leader in a few markets. Moore says "The question is, by so doing, did Apple win or lose? I would argue it played the game correctly, given the hand it was dealt".
It's also interesting to see how the evolution of the simian game has narrowed the terminology since 1995 to 1998/9. I don't want to take things out of context, but from Inside the Tornado on page 68 claims that Jeff Tarter, software industry analyst and editor of SoftLetter likes to call the dominant leader in a post tornado market share pie chart of revenue the "gorilla". On page 182, Moore talks about IBM and DEC as 'gorillas' of the PC industry who failed to take advantage of the new mechanisms of distribution. "And in the 1990s new variations on distribution have allowed companies like Dell, Gateway, and Packard Bell to compete for gorilla status." "In the fight for distribution channel domination, the critical success factors are product leadership and operational excellence." Later, on page 192, Moore says "...when Compaq was struggling to meet competitive price points from both Dell and Gateway, the latter companies made significant incursions into its installed base. In all these cases, however, while invading companies enjoyed a burst of sales for their accomplishments, once the gorilla caught up, they could not maintain their market share advantage." Interesting to note that since 1995, Dell has followed his own strategy (from his book Direct from Dell which is also a good read) of 'beating IBM' and certainly appears to have not only dominated the business sector, but has continued to outperform the others in excellent tornado strategy as well as business model execution. Nice write up on Dell in Barron's by the way from a hedge fund manager.
We now know, in retrospect, that just a few years later the term 'gorilla' has become more refined and that Moore was speaking about Kings and Princes in a royalty game and using a label of 'gorilla' in 1995 to represent the dominant player which later morphed into the term we know as King by the time GG was written. Regardless, the book and Moore's 'growth and evolution' of terminology are worth noting. I think that it is also very important to note that as we move forward, the Internet (the Internet itself, not any individual stocks) - which the RFM authors consider to be the gorilla of all gorillas - will continue to be an important source of tornadoes, gorilla games, royalty games and godzilla games for us in terms of investing opportunities in the present and future. One sees an entire horizon of well managed, well planned strategies being carried out in the respective tornadoes that the Internet has created.
It is because of these opportunities and various tornadoes that I choose to remain in a vastly diverse group of investments which take advantage of 'new tornadoes' that exist outside of older, more established technology adoption life cycle core holdings. I will make the distinction that in terms of risk aversion, because of my age, capital and aggressive growth profile, it is not a game for all, but it fits my 'bigger picture' and goals. Because of this, Inside the Tornado has become an important source of information and strategy for me. I do hope that many others will take a look at this source as well because I think it will lead us to many more excellent opportunities in the future and wealth accumulation.
In closing, here is a blurb from a newsletter that I receive which speaks to four stocks that have been discussed on this thread in the past as well as the eWorld thread. I am only a shareholder in Microsoft and Cisco, but thought it was an interesting read in terms of an important telecommunications network in Asia.
"GLOBAL CROSSING (GBLX), MICROSOFT (MSFT) and Japan's Softbank Corp outlined the structure of their previously announced venture to build a $1.3 billion telecommunications network across Asia. Global Crossing said it would be responsible for management and operation of the venture, known as East Asia Global Crossing. The venture will initially link Japan, China, Singapore, Hong Kong, Taiwan, South Korea, Malaysia and the Philippines with broadband capabilities connecting it to Global Crossing's fiber-optic network serving the Americas and Europe.
COMMENT: The world gets smaller as Microsoft, Intel and Cisco get bigger. Can you picture our globe in five years? In ten? And what about Global Crossing? You know our answer.."
The author of this newsletter certainly is a cheerleader by all accounts, but it is significant to note that the power of the big gorillas continues to offer double digit growth - regardless of their monstrous size. We know that LTB&H investors in these Silverbacks have been rewarded and will by almost any account, continue to be rewarded in the future as the gorillas are able to self expand their GAPs and CAPs by diversification, investing and industry leadership.
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