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

To: Mike 2.0 who wrote (22063)	4/2/2000 4:16:00 PM
From: Bruce Brown	Read Replies (3) \| Respond to of 54805

RE: MSFT and CSCO Here's a message Geoff wrote on the gg list that I thought some of you might find interesting. We were discussing market caps on that thread and below is Geoff's response to the Cisco and Microsoft market cap/growth issue. BB ====== I want to both agree and disagree with the inevitability of slowing growth. The agreement is based on the notion that eventually markets self-organize to contain gorillas. We have been watching this happen to Microsoft, and my belief is, going forward, Microsoft is a "contained gorilla." (This is a new concept for me, so watch out!) Whether or not I have got MSFT right, the idea is that contained gorillas enjoy gorilla privileges inside their dominated markets but no longer have the invincibility they once did in conquering new markets. Thus their CAPs have become "capped," and this should show, I believe, in their stock price. By contrast, "untamed" or "uncontained" gorillas not only have gorilla privileges where they have won to date, they also have gorilla attack advantages on adjacent markets. MSFT exploited an untamed gorilla status against Netscape. It has been able to exert the same power, however, around Win CE and the wireless appliance market. Cisco, I believe, is still an "uncontained gorilla." The market still "wants" Cisco to win the next battles because that ensures the most rapid standardization of worldwide infrastructure deployment (tornadoes "want" gorillas, even though the competitors all "want" kings instead). So until we see the marketplace successfully contain Cisco with an ABC "Anybody but Cisco" movement (like the ABM movement that is containing Redmond), I think we should not anticipate inevitable slowing. It is certainly the case that the management of Cisco is currently as aggressive as it has ever been, so they will not hibernate the way we have seen mature Blue Chip management teams do (IBM in the late 1980s being one of the most egregious, Xerox to day being another). If Cisco remains uncontained, they get to steal market cap every year from Lucent and Nortel in their primary markets, and who knows who else in new markets. That is where the market cap growth would come from. Cheers, Geoff Geoffrey Moore Chairman, The Chasm Group Venture Partner, Mohr Davidow Ventures