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

To: tekboy who wrote (23551)	4/26/2000 3:24:00 AM
From: Bruce Brown	Read Replies (2) \| Respond to of 54805

RE: i2 Mike wrote to Tekboy: ...you pegged i2 a gorilla fetus. Correct me if I'm wrong, but I take that designation to mean that it might become the gorilla, that another company might become the gorilla or that there might never be a gorilla. Tekboy responded: Well, if BB would ever get off his &^@! butt, stop all that singing &^%$!#!, and post his ITWO HUNT REPORT, I wouldn't have to speculate now, would I? <GGG>* There is a reason for the 'butt sitting'. In addition to the acquisition of Aspect Development throwing me for a loop in my presentation, I was contacted shortly after that news and have the opportunity to 'sell' my report on i2. Hence, I am making sure that the Project Hunt version I present here and the version which will be for 'sale' differ enough as to make the entire project worthwhile for all those involved. As to i2's position in the technology adoption life cycle of 'traditional' SCM - yes, I believe the word gorilla is applicable for that portion of their business. The hypergrowth in that cycle for the needs of SCM is already over. Yet, i2 is guiding analysts that the market has matured into a very sustainable 40% revenue growth for many years to come in that market alone. Combine this with the powerhouse union of supply chain inbound/outbound for the business to business market and web based trading exchange application solutions market and I feel confident that the future is indeed bright for this company. The thought process in 1998 by Tom Kippola was that the ERP vendors would swallow things like CRM (front office) and SCM as well as the other ERP value added solutions like order configuration software and product data management software. In reality, it has not turned out that way. The individual value added applications market have, to date, survived and certainly appear to have moved well beyond the 'potential swallowing' point and are poised to exist on their own for many years into the future. Another issue Kippola raised was the validity of the CAPs for these ERP value added application markets. This is discussed on page 260 of RFM as well as in an interview Kippola gave at the Fool in 1998. The question at the time was if the ERP value added application markets would partner with the ERP vendors or compete against. To date, it has been a mix of both. I believe that Siebel, i2 and Aspect Development are three excellent examples of this survival and well crafted tornado execution. i2 commands the largest share of the SCM market and Siebel commands the largest share of the CRM market. Likewise, Aspect Development is the leader in the product data management software market. That's not to say that the ERP vendors will not continue with their 'all in one solutions' because they are and will, but the question remains - will they be able to control the entire market? If we go with the field manual's discussion of an application software vendor market ending up in a classic gorilla/chimp or gorilla/2 chimps market - it appears that room for the individual value adding application dominant leaders as well as the all-in-one solution ERP companies will be able to co-exist. In the meantime, i2 is doing an excellent job of remaining 'neutral' and conducting their business in the tornado of B2B as to best position themselves for the future as a solutions provider. That's not to say the game is 'over' in that particular space, but in terms of "Inside the Tornado" strategies, i2 is well aware of their future and the strategies to get them there. The largest acquistion in the history of the software industry by buying Aspect Development (leader in the product data management game) is confirmation that their vision and positioning for supply chain inbound/outbound union was well crafted. There ceraintly appears to be more gorilla games going on within the application software vendor market than we follow. In CRM, we could probably view the mid-enterprise market as a separate game from Siebel's game. We could also view the market for procurement that Ariba, Commerce One and Oracle are in as another game. Then there is the order configuration market place and I'm sure many other games as well. Too many for me to follow. Now I've forgotten what I was saying. Oh, yes - if you break down the "mission-critical enterprise applications" like the figure on page 258 of RFM, the next three levels are back office, supply chain and front office. We know who controls the front office game - Siebel. I firmly believe that i2 controls the supply chain level. The hypergrowth phase of the original SCM is over and i2 emerged during that phase as the leader - gorilla. As supply chain inbound/outbound plays out in the web for B2B, will i2/Aspect's position in this 'game' as a powerhouse bode well and emerge on the other end as the dominant leader for that market as well? My report covers it in much more depth, but I just wanted to touch on a few points. BB