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

To: Mike Buckley who wrote (12090)	12/5/1999 7:12:00 PM
From: Sam Johnson	Read Replies (2) \| Respond to of 54805

You make a great point that it's the power of the value chain, not just of the gorilla itself, that lends it such enormous advantage. But doesn't that all come from the fact that the gorilla controls it? Basically, a gorilla in a tornado finds itself in a position in which the entire value chain is fighting to keep it in power, out of necessity for every company in the chain. So it sounds like what you're saying is this: a gorilla's power is enhanced by the power of the value chain. A King's power may be temporarily enhanced by the power of the chain, but it's also always threatened by it, since it can exert no leverage to keep the chain from looking elsewhere. In other words, the gorilla owns the football, and the king doesn't. He's a welcome player until someone comes along who can run faster. In that context, I'm not clear at all if a company like JDSU actually has the ability to have the entire value chain enhance their power and secure their position in it relative to the competition, that a Microsoft or Qualcomm does. That still seems to me to be the key criteria for gorillahood. And I just don't understand their field well enough. It may be completely picking nits to speculate about whether there is an alternate route to gorillahood than the proprietary open architecture/high switching costs model. For me, the criteria has just become: If it's not debatable whether a given company is a King in a tornado market, but it is highly debatable whether they are actually a gorilla, then it's probably a fantastic investment opportunity. :) And talking about it and diving back in the manual sure has given me a better grasp of the concepts. Sam