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

To: Mike Buckley who wrote (28950)	7/27/2000 1:07:49 PM
From: alburk	Respond to of 54805

I sent a private message to Mike. He suggested that I post his response to the thread for discussion purposes. Thanks for your insights Mike. Andrew, Before I answer your questions directly, I want to emphasize that I was only hypothetically addressing the possibility that the CDMA2000 market might not develop to the massive size I think it will become. If it doesn't become anything more than a niche market, that gives rise to the possibility (theoretically) that there could be a dominant chimp instead of a gorilla. That dominant chimp would be QCOM. Now, about your good questions. Not sure you can classify Q as a Chimp, that would imply that there exists a gorilla in a larger market of which 2G CDMA is a niche market. I don't think so. Check out the manual and tell me if I'm wrong. You're right that it could imply that but it's not necessary that it be implied. If you think of 2G CDMA as a niche market within the larger wireless market, you then need to think of what the larger market is. In this particular hypothetical case, it would be the GSM/TDMA wireless market which is a royalty game. Being a royalty game, that game has no gorilla of course. In other words, I don't think Moore's definitions require that a dominant chimp in a niche market exist within the scope of a larger market of proprietary architectures; I think that niche can also exist as part of a larger market which happens to be a market of open standards. It's an interesting distinction you raise that I don't remember contemplating in the past, so I might be wrong. I concluded that the answer is that QCOM is the gorilla of 2G CDMA. Inherant in that conclusion is the conclusion that 2G CDMA represents a mass market worthy of gorilla game status. Agreed. Are you suggesting that 2G CDMA is a niche market to 2G or 3G--neither of which may have a gorilla? That's two questions. For now ignore the issue of whether or not there is a gorilla and I'll deal with that in a moment. The first question has to do with whether or not 2G CDMA is a niche within 3G. I don't look at it that way but these are all very abstract issues in which there really is no absolute view that is correct or wrong. For the people who think those markets are sufficiently small, one valid concept is that 2G CDMA and 3G CDMA are both niche markets that make up the whole of the CDMA market. For me (and I think you) it's a moot point because we believe each is large enough to be larger than a niche market. As to the question about the gorilla, I believe Qualcomm is the proven Gorilla of 2G. For those who don't, I think the only other reasonable way to view it is with Qualcomm being the dominant chimp of that so-called niche. I think the same two ways to look at 3G exist, though both views would be hypothetical since there is currently no 3G product being adopted by consumers. These subjects you're raising are very abstract, thus very difficult to discuss the nuances. The next time you're in the DC area, join me on the deck and we'll have fun hashing it out. Unless you have strong reasons not to take this discussion public, I'd appreciate it if you would copy this into the folder. I think your questions are probably shared by many. Between you and I, we might help those folks out quite a bit, at least to the point that they can decide that they vehemently disagree with us. :) --Mike Buckley