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

To: Uncle Frank who wrote (15035)	1/13/2000 3:22:00 AM
From: Rickus123	Read Replies (4) \| Respond to of 54805

I'm finishing up my second reading of the FM (or more accurately, my first reading of the RFM), and I have some thoughts about the authors' crowning of Oracle as a gorilla in Chapter 8 (Case Study 1: Oracle and the Relational Database Tornado). WARNING: This is long. The following quote provides the backdrop for this discussion: The whole combo -- a proprietary open* architecture with high switching costs -- is the formula for gorilla power...* (RFM, p. 55) The authors assert that Oracle emerged as the gorilla from the relational database tornado in minicomputers in the 1980s, then give other clues that seem to contradict that claim. They mention how, early on, the market for RDBMS was given "a huge boost when Oracle standardized on IBM's SQL language" (RFM, p. 199) So there was really no proprietary architecture, after all. At this point, it appears that Oracle was in no position to control the architecture in a way that would hinder its competitors. Nor could it charge any royalties to others who wished to sell their own implementation of SQL. And the stock price didn't behave the way a gorilla's stock price should (or maybe I'm just too spoiled by the Q). From the authors' first 'purchase' on 6/30/88 until the end of 91, when they refer to ORCL as a "post-tornado stock", the stock price has gone from $20.04 to $28.90. That's a 44% increase in three and a half years. Based on my understanding of things, I would refer to the minicomputer RDBMS game as a royalty game (because the architecture was not proprietary) with Oracle as the King. It is shortly thereafter (1992) that the relational database tornado in client/server computing begins. Here, the authors describe that one key to Oracle's victory in this gorilla game centered on their implementation of 'row-level locking', a performance-enhancing feature that Sybase (one of Oracle's competitors at the time) had not yet implemented. It seems that this feature helped establish Oracle as the de facto standard in the client/server tornado as vendors began designing it into their apps. And the stock price definitely acted more gorilla-like. From the point when they bought back into Informix and Sybase on 7/31/92 until the middle of 1997, Oracle's stock price rose from $18.63 to $257.41. That's a 1380% increase in five years. One of the things I find interesting about this is that 'row-level locking' is not part of the SQL ANSI standard. It is an extension to the language. So I would classify the client/server RDBMS game as a gorilla game, with Oracle being the gorilla. But only to the extent that a gorilla game can arise from a proprietary extension (row-level locking) to a committee-controlled architecture (ANSI SQL). This precise situation is addressed (RFM, p. 54): Committee-controlled architectures have serious drawbacks, however. First, they lack a single implementation, each vendor being free to create its own interpretation of the standard, and thus the anticipated freedom from switching costs is often an illusion. The authors seem to be saying that one of the drawbacks of this type of architecture is that it creates the very thing that a proprietary open architecture is supposed to create...high switching costs. Whew. Hopefully, somebody out there a) is still awake and b) thinks this is also a relevant point. --Rick

To: Uncle Frank who wrote (15035)	1/13/2000 4:04:00 AM
From: Martin Rasch	Read Replies (1) \| Respond to of 54805

Status of ICGE FYI an excerpt from the GG discussion list (threatmates following this list can push the NEXT button now) Tom Malia (Member of the GG discussion List) wrote I have said this here before so I suppose no one really likes my analysis. However, here goes: I believe we can analyze this group (incubator kangaroos CMGI ICGE SFA) using the gg principles. We can view the "network" of companies owned by an incubator as a proprietary architecture. Other elements of this architecture are the methods and services that are offered to the startups. There obviously is a high cost of switching. A startup doesn't just pull out of one incubator and go to another. Geoff has used the analogy of riding the wave as far up the beach as possible during the tornado. That is what these guys are doing right now. They are shipping into the internet tornado. Delivering dot com companies to every niche of the 'net. The article in the February, '00 Red Herring is very informative. They point out the stakes are whether the winners will be "econets" or conglomerates of the future much like GE or ITT. In addition, as the CSFB and McKinsey articles by Guy Maubossin(forgive my spelling)point out, the stickiness of the first movers present increasingly high barriers to entry. CMGI and ICGE are very nearly "classic" gorillas--IMVHO. Geoff is too conflicted to crown them. Will anyone else? or is it too early? Response from Geoffrey Moore Gang, I buy Thomas's arguments, for whatever that's worth! eom MR

To: Uncle Frank who wrote (15035)	1/13/2000 5:14:00 AM
From: LindyBill	Read Replies (1) \| Respond to of 54805

There is an on-line slide presentation of Q's annual meeting available: corporate-ir.net; I will post more info tomorrow about the plans for the annual meeting. I will put together my best ideas for this meeting, and then let you guys shoot at them.