Tero,
*** OT *** Re: "The Gorilla Game: An Investors Guide to Picking Winners in High Technology" by Geoffry A. Moore, Paul Johnson, Tom Kippola (originally published in 1998 - Revised Edition published in 1999)
<< Post# 5230: Eric - what your "King" and "Gorilla" nomikers for Nokia and Qualcomm can't explain is the current standardization situation >>
In response to your original post I made the statement:
Let me say that I am not here to spread the gospel of "Gorilla Gaming", an investment theory that I subscribe, and attempt to interpret rather literally, in choosing candidates for my portfolio. I discuss that on another thread dedicated to that theory. Since you asked I will respond, however.
.. and I linked you off to a Chasm Group presentation, Standards and the Gorilla Game: The Dynamics Of Setting Standards In High-Tech Markets, which I felt was most applicable to your statement:
fuji.stanford.edu
In regard to this post:
<< The problem with Gorilla theory is not the original book; it's the way people interpret it. >>
Well, I am as a matter of fact one of them people. My portfolio problems must lie with my interpretation of the book ... no wait, my portfolio has been in great shape for some time, and I hold mostly what Moore calls "Gorillas" & "Kings", so perhaps my interpretation is reasonably sound.
<< For some reason USA is the world's leading market for bestsellers that invite readers to believe that complex and difficult things can be boiled down to 3-4 simple rules. Scientology, Atkins Diet, Gorilla Game - just check in your brains and follow some simple rules and you can be smart/thin/rich. Gorilla Game has been turned into some sort of "Chicken Soup for the Soul" for greedy people >>
I have read no Scientology, "Atkins Diet" or "Chicken Soup for the Soul" so I won't comment on them, but I can comment on "The Gorilla Game". Applying some discipline by following a long term buy and hold investment strategy in tech stocks, that focuses on capital preservation while optimizing opportunity for growth, may not make one "rich" but it offers a higher chance of success in acquiring wealth (however one defines that) over the long term, makes more sense to me than an undisciplined approach to tech investing.
Application of "The Gorilla Game" theory is not a matter of boiling tech investing down to "3-4 simple rules". A quick scan, or even a thorough single read of "The Gorilla Game", won't make one "rich".
<< The idea that you can simply label different companies in different industries and then put them into neat little boxes apparently has great appeal to engineer-types. They like to approach investing as if it can be reduced to simple instructions. >>
"Gorilla Game" is not really written for "engineer-types" although they might benefit from reading and applying the theory. It is really written for individuals who are not heavily background in technology. Even nonengineering sales & marketing types (like me) can potentially benefit from reading, evaluating and applying, those portions of the theory that apply to their individual investing style.
<< What's weird about this is how it contradicts the American reputation for individualism. Several people at SI have many really sharp and good observations - yet they undergo a scary transformation into Gorilla cultists at the drop of a hat. Hoodoo mumbo-jumbo about "proprietary open architecture" is supposed to guarantee the success of Globalstar or cdma2000. >>
Has a "Gorilla cultist" (LOL!) ruffled your feathers? If so I hope it was me <g> since they are darned hard to ruffle (to your credit). I am not sure I am a "cultist" but I am an advocate and a practitioner of "Gorilla Game" theory and methodology, although not to the exclusion of other investment theory.
Moore says that "the whole combo - a proprietary open architecture with high switching costs is the formula for gorilla power, assuming the company is successful in assembling the partners needed for a working value chain around this architecture, and the market for this value chain goes into hypergrowth".
For me, that simple sentence that you call "Hoodoo mumbo-jumbo" is the basic principle of the "Gorilla Game". Proprietary open architecture, in an of itself does not constitute a gorilla advantage. You have to look at the whole "combo", and understand what you are looking at.
The formula you refer to as "Hoodoo mumbo-jumbo" was introduced by Charles Ferguson and Charles Morris in "Computer Wars". Have you read it? It is quite a good read. Moore says, they were the first ones to explicitly call out the importance of architectural control to market place power. The idea is as straightforward as it is elegant, and we are proud to appropriate it. In Chapter 3 of "The Gorilla Game", Moore then goes on to describe how this plays out (you might want to reread that chapter).
<< "Committee-based standards" = EVIL!! >>
"Committee-based standards" (or architecture which is what we are really talking about) are NOT "EVIL!!", they simply do not provide the gorilla advantage (to Moore's way of thinking, and in this case mine).
If you recall from your read of "The Gorilla Game" Moore introduces two families. One is the primate family (gorillas, monkeys, chimps) and the other is royalty (kings, princes, serfs). Without architectural control of an enabling technology a A "Market Leader" (like Nokia) simply does not meet Moore's definition of gorilla, and consequently needs to be evaluated as a member of royalty, rather than a primate.
There is nothing wrong with "Market Leaders" that contribute mightily to the evolution of "committee-based standards" (or architecture) as Nokia most definitely has.
Mobile wireless telephony is all about "Committee-based standards", and perhaps more so than most categories of technical endeavor (but certainly not all).
In evaluating Nokia (which I do on an ongoing basis), I think not only of the major contribution (and power derived from) participation in ETSI, 3GPP, and the various AG's & IG's of GSMA, but also their participation in other consortiums and forums like WAP Forum, UWCC, IPv6 Forum, Radicchio, and numerous others. We will and should of course discuss this often on this thread. We should probably discuss "Gorilla Game" theory elsewhere.
BTW: Are you aware that Nokia is a client of Geoff Moore's Silicon Valley based "Chasm Group" consulting firm?
They are in good hands, IMO. *** EOT ***
Respectfully Y have a great Nokia Day.
- Eric - |
