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

To: DownSouth who wrote (27873)	7/13/2000 9:54:52 PM
From: sditto	Read Replies (2) \| Respond to of 54805

This whole discussion about QCOM and the parallels to INTC and MSFT just utterly fascinates me. Call me an architecture freak but I think the concept of open proprietary architecture is both poorly understood and the key to understanding the path to Gorilla power. Figuring out how to control the architecture is more important than manufacturing prowess (although that helps too). At an early stage, a new innovation will probably not represent an entirely new architecture in and of itself but rather will form a component (hopefully a significant component making it the technical equivalent of a heart, brain, or spine) of an emerging architecture. Think of the innovation as just being one more part added to the voluminous shelves of Home Depot. Nice feat but no architecture in sight. To start down the Gorilla path, the developer of this innovation (hopefully highly discontinuous to some big market) needs to think of a way to make this shiny new thing truly useful. As the new innovation takes shape, potential business applications start to emerge (“holy moly Batman, we could sell this stuff to the government so they can send secret messages”) and potential architectures are formulated to support the needs of the business application. In the case of wireless, architectures can exist at many levels - the overall wireless network will have an architecture, the individual cell phones will have an architecture, and the CDMA chip in each cell phone and base station will have an architecture. After spending some time thinking through the architecture, the developer combs the aisles filled with useful stuff from other vendors and proceeds to design them into the newly formed architecture using software to create the linkages (rather than hard wired in a way that makes the relationship too entangled to cut at a later date). In later stages, as the architecture takes full shape, the architect can use its position of power and influence to design out the other components (“sorry Mr. RF amplifier supplier, we’re going to put that on our system on a chip from here on out”) which in the semiconductor world happens every generation or so thanks to Moore’s Law. This type of control over the architecture happens even if INTC, MOT, LSI, or anyone else gets into the CDMA chip business and will be very important (and probable) because mobile devices need low power consumption and a small profile which favors function integration where possible. As time goes on and if the Gorilla started with an important part of the architecture (I might classify CDMA as the spine) it can use this powerful position to direct the architecture in new directions to meet new business needs. Importantly, this can happen even if parts of the architecture are open and non-proprietary. Want voice recognition? Build it into the architecture. Same for data compression, video processing, encryption, secure storage, high-speed device interfaces, multi-OS support, or whatever else needs to be added to meet the killer apps of the 3G world. At every turn the visionary Gorilla can (and must) try to take further control of the architecture. In later stages, it may even become possible for the Gorilla to use its growing power to expand its control beyond architecture of the major system component to architecture of the entire system itself. Before you know it, the handset companies are just low margin value added resellers putting a pretty plastic cover around your high margin innovation and all are happy to pay for your QCOM Inside logo to appear on everything from their TV ads to their T-shirts. sditto@givemeanarchitectureandicancontroltheworld.com

To: DownSouth who wrote (27873)	7/14/2000 3:20:47 PM
From: mauser96	Read Replies (1) \| Respond to of 54805

I rushed to the store to buy one of the first IBM PC to show up in my home town. If memory serves, it cost around $5000 in early 1980's dollars, had no hard drive, almost no software available, slooow, but it was a real computer and it was mine. People today don't realize what chaos was created by the multiple OS. Almost everybody heaved a big sigh of relief when Wintel won. I would be very surprised if the cell phone market doesn't become at least a partial commodity . I'm less sure about the time span but expect the process to be well started within 5 years.