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

To: DownSouth who wrote (28168)	7/17/2000 7:52:45 PM
From: 100cfm	Read Replies (1) \| Respond to of 54805

QCOM's costs would go down to merely sales, support, administrative and R&D. Margins would be stellar. DS, isn't that the status of Q right now since they are Fabless.

To: DownSouth who wrote (28168)	7/18/2000 12:18:31 AM
From: sditto	Read Replies (1) \| Respond to of 54805

Can/will/should QCOM become an IPR Gorilla living off the profits of its portfolio? Fortunately, Geoff Moore has come to the rescue and provided some answers in his latest book Living On The Fault Line (damn he's good and still a step ahead of me). According to LOTFL, companies need to focus on core and outsource their context. Core is whatever generates sustainable competitive advantage. Context is all the rest. I would submit that for an aspiring Gorilla, Core is anything that allows it to control an open proprietary architecture and a strong value chain. In the case of QCOM, the question is what architecture are you trying to control - is it a) the CDMA processor or b) the wireless systems enabled by the CDMA processor? If you choose a) your work is nearly done. You get a recurring $BB future revenue stream with a near 100% profit margin since past R&D was expensed and SG&A consists of filing and storing license agreements. You consult with leading manufacturers and operators to ensure they make the most of your IPR. Many other companies become rich off your ideas but that's OK because your market cap approximates INTC today and your investors retire in relative comfort. If you choose b) you get all of a) plus the majority of the $BB revenue stream from world-wide handset sales offset by continued R&D and additional SG&A to keep pushing the competition back into their corner. You move aggressively to control your architecture and expand your value chain. Working with leading VCs and your value chain partners, you provide funds, early releases, and consulting help to software companies committed to creating compelling applications for your products. Taking a page from the CSCO playbook you do not hesitate to fully outsource any part of the operation (including manufacturing) that is not core but you do not give the work to competitors instead feeding it back into your ever strengthening value chain. In a move reminiscent of INTC, you approach the Asian handset manufacturers and offer to play Andy Grove to their Michael Dell and make them all filthy rich while improving their export trade balance and decimating European competitors with Japanese sounding names. At the end of the day, your market cap is best viewed using exponential notation and your investors retire to their personal islands and light cigars with $100 bills. sditto@thegorillagameistoofuntostopatIPR.com