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

To: Mike Buckley who wrote (12316)	12/8/1999 12:22:00 AM
From: surpow	Read Replies (1) \| Respond to of 54805

RE: SEBL<<As for me, I'm waiting to see the results of the ERP vendors' entry into the space since they pose the only remaining possibility of taking over rights to the crown.>> Could you please expound the above comment? Also, out of curiosity, do you view the potential lack of merger b/w TVGIA and GMST as a reason to wait to invest (further) in GMST? Thank you for your ongoing help. Surpow

To: Mike Buckley who wrote (12316)	12/8/1999 3:41:00 AM
From: Bruce Brown	Read Replies (2) \| Respond to of 54805

Just to clarify, I had shared Geoff Moore's comments from the Bill Meade GG list serve with regards to Siebel a few months ago. His comments came after the revised manual had gone to print and were in the thread of 'everyone in the Valley has declared them the gorilla'. Sorry, I'm too lazy to dig through the digest at the moment to find it again or to go back on this thread and find the post (it's in here). We did discuss that just because the 'valley' made a declarative statement like that doesn't mean we should accept it as 'truth'. Then the revised edition hit the stands. While Mike was in Italy, Nortel's acquisition of Clarify took place. I forget the exact sequence of events, but I believe just prior to that Peoplesoft acquired Vantive because they always had a 'nice' relationship together - not to mention their balance sheets were equally unattractive to me while Siebel's was very attractive. Here's what Kippola says on page 278-9: "In summary, round one of the integrated SFA/customer service game is over, and the leader is Siebel Systems. Going forward however, Siebel must fight a three-front war. First of all, it must defend its leading position in the large enterprise SFA and customer service categories where the contenders include not only Clarify and Vantive, who are both still fast-growing chimps (gorilla Siebel grew revenues 89% in 1998, while Clarify grew at 48% and Vantive 39%), but also the large ERP players, most notably Oracle and SAP. Secondly, the 'gang of four' mid-enterprise CRM vendors (Saratoga Systems, Pivotal Software, Onyx, and Saleslogix) will likely continue to win a large number of medium, medium-large, and even a healthy dose of large systems deals, simply because their products are optimized for faster installation and faster modification. Lastly, the rise of the customer-facing CRM technologies will keep Siebel and all of the other CRM vendors busy building an 'all-facing' integrated CRM suite for the future. One last thing to remember about this gorilla game in progress: as we noted earlier in the book, high-end business application software gorilla games often do not confer huge market shares to the eventual gorillas. In other words, while enabling technology gorilla games might end up with gorillas who own 60% to 90% of market share, it is not uncommon for the gorilla in a high-end business application market to own merely 25% to 30% of market share. As such there is typically plenty of room for chimps to perform well, particularly in a fast-growing market. The CRM megacategory is a highly dynamic one that will likely produce a number of good performing companies over the next five to ten years." I had to post every word of those two paragraphs from the book because it explains the situation better than any other I have encountered. Not only has the 'valley' declared Siebel the gorilla in the CRM space, but so has Kippola in the revised manual. He points out that a gorilla, chimp 1, chimp 2 situation can thrive in this fast-growing market. Chimp 1 and Chimp 2 for all practical purposes are now going to 'thrive' under Nortel and Peoplesoft. The threat from Oracle, SAP and Peoplesoft - fat vs. thin client, hybrid architecture, adaptation to the Internet, etc... is indeed all very real. Just as is the fact the game is still in progress. Kippola ends the chapter saying this on page 280: "Perhaps the single greatest lesson from this chapter is that the fight between employee-facing CRM vendors, partner-facing CRM vendors, customer-facing CRM vendors, and ERP vendors will test investors to make thorough assessments of company and category GAPs and CAPs before placing their bets. Rule number one from the 10 rules is this: If the category is application software, buy in the beginning bowling alley. (That way you get the maximum return from the upside surprise.) I'm not sure that rule fits the criteria of many on this thread that seek risk aversion, so those that waited to buy Siebel did indeed avert the initial risk of the bowling alley and are poised to gain from the 'highly dynamic' growth over the next years, but they missed out on a lot of the early fun. Whether Siebel continues as a gorilla or due to the evolution in progress is relegated to chimp status, the future growth looks - at this point - to be able to support either version provided Siebel continues to perform as they have been in the past and hold market share. They are coming in with some incredible quarters and I'll be damned if I find any reason to sell at this point. Yet, as Mike so aptly pointed out - enabling-technology tornadoes will dwarf all other returns. Therefore, I believe we addressed the issue of the expectations for return on Siebel should be understood in the light that there is no way it will match the enabling-technology tornado returns. I don't know if Mike would agree, but at least I am pleased with my returns to date in this game. I, being the diversified gamer, am continuing to look at other sections of this CRM game in the mid-enterprise vendors. I join Kippola and the 'Valley' in calling it a gorilla within the guidelines that an application vendor with a market share of 25-30% can exist. Regardless of what I call it - the fundamentals and the 10-Q from Siebel are really what I am focused on. The game is not over, but the growth momentum is in tact. BB

To: Mike Buckley who wrote (12316)	12/15/1999 2:34:00 PM
From: pann1128	Read Replies (2) \| Respond to of 54805

Looking for your posts on the Front Office Gorilla game. How do I go about searching the thread for these posts apart from scanning the the titles of all the posts? This question is for anyone who can help me. Also, Mike i am curious about the PSFT/VNTV merger to see how they stack up against SEBL. I don't recall if SEBL was taking market share away from VNTV and Clarify. I am in the SF bay area, and I hear through friends that PSFT is anticipating massive demand after this merger, and is ramping up hiring like crazy. Wonder if they will put up a good fight against SEBL. Any thoughts would be appreciated. Cheers, Piyush