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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Mike Buckley who wrote (11285)	11/28/1999 7:50:00 AM
From: John Stichnoth	Read Replies (2) \| Respond to of 54805

Mike, Continuing on with the corollaries/analysis and Zi Corp: I am not an insider of Zi or its suppliers/customers. I have followed the company for about 3 years. There is a fairly active thread here on SI. I also have some perspective because of QCOM, and thus Ericsson activities. I also spent time in Japan a decade ago, and perhaps that gives me better perspective than some about China. But, all that is knowledge that any of us can get sitting in front of our monitors these days. Re <Pick on someone your own size> Yes, I did misunderstand that. (My take was that the market must be large enough to be interesting, and it is). Zi's only competitor at this time, Tegic, is their own size. It's a royalty-type game, a la Rambus and Gemstar. And each has comparable numbers of employees (under 100; Zi has 45) in similar sized opportunities. The direct market in Zi's case is companies making appliances for China. That is a finite world, again comparable to Gemstar. So, I think the market is appropriate in that sense. Re <extension> I'm fuzzy on this. The market might be defined as (1) each licensee selling their unique product into the market, or (2) each group of licensees selling their competing products in the market, eg., all the phone makers, or (3) all the licensees selling communications devices, with each licensee representing a bowling pin. I tend to think of it that third way. With the ERICY deal alone, they have more than a 40% share of the GSM China wireless phone market. Ditto for the Ministry of Education deal in certain educational initiatives; the potential is to be on all the students' desktops nationwide, so they are not there but have the best chance to be there. Re: <Do the corollaries work?> Yes. . . Answering you questions has been helpful in thinking about issues in a slightly different way than I was. As you probably realize, I like the checklist approach in thinking about companies. That's a helpful part of The Gorilla Game itself, its specific questions. . . . and No. It still doesn't ask all the questions. (And I here you saying, "Of course not. No series of generic questions asks all the questions"). For me, the one issue that makes one gorilla especially attractive is management. Moore never addresses that, if I remember. The thing that is really attractive about the best gorillas was not just their market position, but also their managers. The deciding reason for me getting into Gemstar now--rather than waiting for the Tornado--is Henry Yuen. I think his accomplishments to date have been remarkable. Just think about this scenario: A guy with no manufacturers behind him has a piece of software that he wants to get into all those VCRs. He walks into the New York Times and gets them to start publishing his VCRplus numbers. The rest is history, as all VCRs today have VCRPlus. That is cool! The same kind of "cool"ness can be ascribed to successes by Gates in the early years (dos and IBM), Grove, Ellison, Chambers, and the Jacobs/Viterbi team of course. And that's what gives me some pause about Softee--as Ballmer is no Gates--and Intel--with Grove's moving to the background. I got into Oracle this year, only because of articles pointing out that Ellison had put away his sailboat for the time being and was back at work (oh, yeah, and because the stock was weak). So, a question I would ask is, "Do you regard management highly?" My answer in Zi's case is qualified. They've made a lot of missteps to get where they are. But, they now have some real successes under their belt, so they've already negotiated a minefield. So, I'm not rejecting them as a candidate. [BTW--Just a month ago, I did reject them as a candidate. Things and opinions do change]. Best, JS