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

To: Uncle Frank who wrote (17462)	2/7/2000 9:49:00 PM
From: Mike Buckley	Read Replies (3) \| Respond to of 54805

Has CREE crossed the chasm? Don't ya just love that illiteration? :) Frank and all, The discussion you're having about that is fascinating. I don't follow the company or its product category well enough to have an informed opinion. But I think I can offer some questions to answer that, in so doing, will help each of you decide for yourself. 1) If CREE's LEDs have crossed the chasm, the company has knocked down or is at least in the process of knocking down one bowling pin. In other words, the company has concentrated all of its efforts on producing a whole product for one product niche. A lot of people tend to forget that it's important that the first head pin be used to strategically knock down one or two of the adjacent pins. If that doesn't appear to be happening, it's likely that the product has not yet crossed the chasm. The question to answer might be, "Which niche market is the head pin and has the product penetrated that niche?" An answer of "Yes" implies that the chasm has been crossed. An answer of "No" implies that it hasn't happened yet. 2)Another way to approach the discussion is to identify the characteristics of those adopting the product. Are the current adopters those who are willing to work with a product that is only 80% of the total solution, or are the current adopters those who waited for the whole product, the 100% solution, to come about? If it's the former, the product is still in the hands of the visionaries and probably hasn't crossed the chasm. If it's the latter, the product is in the hands of the pragmatists and the product has probably crossed. One final comment: tell me if I'm wrong, but as I map the terrain of CREE's proprietary architecture, it is in the vertical market systems sector as described beginning on page 133 of the revised manual. If that's the case, it's important to acknowledge the last paragraph addressing vertical market systems as follows: "It is still possible to have local tornaodes, of course. As a rule, however, they are harder to see, particuarlarly for an outside investor, and in any event they will not scale beyond the limits of the local market. Hence, our recommendation to gorilla-game investors is, do not play the gorilla game here unless you happen to be employed in one of those markets or are willing to do the extra homework necessary to navigate your way." There's no question in my mind that folks around here are doing the extra homework. But if it's difficult as the authors insist to see a tornado, I can only imagine how much more difficult it is for you to determine whether or not the product has crossed the chasm. The consolation? Be glad CREE's product addresses many vertical markets. As an enabling technology that is only two layers above the lowest layer, electricity, it could eventually be at the vortex of many tornados. --Mike Buckley