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

To: Uncle Frank who wrote (12501)	12/9/1999 6:36:00 PM
From: tekboy	Respond to of 54805

Re JDSU's Status: Fool Consensus is "King" As promised, here are some responses from knowledgeable Fools. I posted the following query on the JDSU thread over there: boards.fool.com One wiseass offered this response: boards.fool.com A somewhat more serious post was the following: boards.fool.com I would agree that JDSU fits mostly into the "king" title, however they do have some gorilla like qualities. You see - in the field of DWDM, they are the by far the most advanced vendor of components, so it's like they are a King who also has a huge technology related competitive advantage. Think of it this way. JDSU is like DELL, but with ownership of the processor technology that goes in the computers. Now, unlike DELL, they also don't such amazing e-selling capabilities, marketing, and there are surely many more competitors out there who make their own "processors". For analogy purposes, when I say JDSU is like a DELL who makes their own processors, I'm referring to things like DWDM filters. These are really the light processors that JDSU makes so well (now that they are buying OCLI). Before the OCLI deal, JDSU still fit their title well because of guaranteed supply through joint ventures. The area of active components (wavelength lockers, tuneable sources, pump lasers) is similar. Uniphase is known to make the best pump laser chips in the world. This is an advantage that puts them into slightly better than King territory. Risks: If JDSU gets hit from the side (by a discontinuous innovation), then they will suffer greatly. For example, say somebody else comes out with some amazing way of doing DWDM through array waveguides, or whatever. If they are able to make them cheaper and in mass quantities, then JDSU would lose a tremendous amount of business. Why do I feel comfortable with the investment? Because JDSU knows a hell of a lot more than I do about competing technologies, and has many many bright minds working on this stuff - probably more heads than any other company in the world working on new stuff. I place my bet that JDSU will continue to innovate faster than the rest of the market. Let's hope I'm right, eh? another good answer was this: boards.fool.com I think it's an incredibly strong, powerful King - but not a Gorilla - for two reasons: 1. Wave Division Multiplexing is not a "proprietary" protocol. Thus, as far as I know, JDSU cannot make changes to the way in which its devices communicate with each other in order to keep its competitors off balance. 2. There are not "high switching costs." JDSU is a component manufacturer to optical equipment vendors. As far as I know, there is nothing in particular about JDSU's products that would prevent a customer from replacing them with those of a competitor. to which somebody else posted this: boards.fool.com JDSU's fastest growing business is subsystems, components combined not completely into systems but pieces of the complete systems themselves. This availability of subsystems could cause "high switching costs" for customers since JDSU's competitors can't offer subsystems because of their lack of product breadth. This still doesn't make JDSU a gorilla but is something to keep in mind. I have a feeling SDLI and ETEK are going to join up to form a "mini JDSU" anyway, so that they can compete in this subsystem market. If they don't they will be in trouble once demand begins to be met. tekboy/Ares@stillcan'tspellQalQoven.com

To: Uncle Frank who wrote (12501)	12/9/1999 8:10:00 PM
From: John Stichnoth	Read Replies (1) \| Respond to of 54805

Hi, Frank. Re IBM's pongidity. I know we've alluded to a disagreement on this before, but I think our difference is not so important, because we get to about the same place. I think of IBM as a gorilla of mainframes even today. The power of the mainframe has lessened because its "centralness" (is that a word?) to these companies' operations has been supplanted by minis. But, mainframes are still there. And IBM remains the dominant player in them. This is relevant mostly in relation to evaluating these companies' strengths in going after new arenas. IBM successfully leveraged their mainframe position into dominance of the services business among the Fortune 500 (as King of course). That position in turn gives them strength in going after the "e" stuff, again in that same business group. It's a heck of a niche with which to cross the Chasm, wouldn't you say? Best, John