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

To: shamsaee who wrote (28138)	7/17/2000 4:40:00 PM
From: DownSouth	Read Replies (1) \| Respond to of 54805

Upto date AOL is still number one and being an ISP has no technical wizardry or IP roadblocks .INTC and TXN can say what they want but if NOK can't get it right after trying for years,I don't see how INTC and TXN can close the gap. Apples and oranges. AOL is a service. They are gaining customers by "giving" their services away in an ongoing, huge market campaign. They are keeping their customers because of the relatively high switching costs. Most people don't want to change their e-mail address, loose access to Instant Messaging, or go through the mysterious hassle of setting up a new ISP on their computer. Cell phones, otoh, are very simple to throw away and buy a new one. Unless you change service providers, you even keep your phone number. Changing sp's and getting a new phone number isn't a big deal, either. In fact, everyone probably will throw away what they have right now within the next 2 years or so. I don't think folks have much loyalty to the NOK brand name, either. It's just another Japanese phone. <g> Texas Instruments and Intel, otoh, are real brand names, and hardly anyone will question the quality of their products.

To: shamsaee who wrote (28138)	7/17/2000 4:54:22 PM
From: kumar	Respond to of 54805

AOL/ISP etc : food for thought : from the GG listserv : " Gang, I'd like to comment on this post by kumar: * If I understand the book right, the biggest differentiator between a gorilla and a godzilla is the presence/absence of a tangible product (with lockins in either case). I see INTC, CSCO, MSFT have tangible products. I also see AOL, HLTH etc have "a not so tangible product", but have a mechanism for a lock-in. They work on the basis of "user stickyness". Do we call that attribute a product ? I thought so, but I'm not sure anymore. Godzillas also tend to get evaluated on "potential future stickyness" in areas outside of their curent sphere of operation. comments ? cheers, kumar * There is an important point to get here. Product-based technologies force users and partners to adapt to technical standards that create switching costs -- the core of the gorilla lock-in. Internet-based services, for the most part, do not have this feature. They do, however, create other types of switching costs, ones that are less blatant but not necessarily less effective. In the case of AOL, if you have all your buddies on AOL, if everyone has that email address for you, and if you like to chat in their chat rooms, you have BIG switching costs to leave. In the case of Healtheon, if you have committed to a business process that is HLTH-enabled and you decide to stop, again you could have big switching costs. Then there is the issue of increasing returns. The more people you know on AOL, the more valuable it becomes to you (and them). The more companies that transact on HLTH, the more valuable it becomes to the whole industry. Thus one can achieve de facto standard lock-ins without proprietary technology. The reason why we use two different words, however, is that with products we know the locks hold, whereas to date, with Internet services, it remains to be seen. Geoff Geoffrey Moore Chairman, The Chasm Group (650) 312-1946 Venture Partner, Mohr Davidow Ventures (650) 854-7236 "

To: shamsaee who wrote (28138)	7/17/2000 5:03:02 PM
From: sditto	Respond to of 54805

One of the things that protected AOL in the skirmish vs. MSFT was the network effect of an ever increasing AOL subscriber and advertising base cemented by their proprietary IM capability, chat rooms, and other sticky features like e-mail addresses. There is a great lesson here - any company can become more Gorilla-like and/or protect itself from Gorilla incursion through effective management of its proprietary architecture, value chain, barriers to entry, switching costs, and network effects. It would be an interesting exercise to think through how QCOM could leverage network effects to its advantage. One example: create a killer application (e.g., multi-player games, GPS tracking of your kids, digital picture IMs, etc.) that can only be delivered via 1xMC and/or advanced CDMA handsets and achieves lock-in before other high speed services get off the ground.