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

To: Mike Buckley who wrote (28952)	7/26/2000 6:58:24 PM
From: Mike Buckley	Read Replies (4) \| Respond to of 54805

DS and all, Someone tell Frank that I realize that he's not DS. :) After having reviewed all the posts about whether or not Spinco is playing a gorilla game or a royalty game, I continue to believe my response to Chaz (http://www.siliconinvestor.com/readmsg.aspx?msgid=14113032) is on target about the three kinds of software he discusses. I'd like to add that I see some confusion about these matters as I read the last 80 (whew!) or so posts. I'd like to help eliminate the confusion because it applies to any assessment of any product category. I've seen comments that depending on what one company or another company does, the product category will be either a gorilla or a royalty game and that we won't know until those companies play their cards. Not so. Determining whether or not a gorilla game or royalty game is taking place has to do almost entirely with one very important criterion -- whether or not there is a proprietary, open architecture. The second point is that we don't need to see a leader emerge to determine if it is a royalty or gorilla game that we're messing with. Royalty games can be played forever with or without a King. The metaphor of a gorilla game breaks down somewhat when we also realize that gorilla games can play out forever with or without a gorilla. Chaz regularly and thankfully reminds everyone that I like to focus on the various product categories in a company's business model to gain a full understanding about which type of product is in a royalty game and which type is in a gorilla game. Most companies that play gorilla games are also simultaneously engaged in royalty games. (No example comes immediately to mind of a gorilla that does not also play a royalty game.) But some players of royalty games (such as Dell) and indeed some Kings may never play a gorilla game, much less become a Gorilla. In summary, to determine if a gorilla game is being played, look first for the proprietary, open architecture. If it ain't that, it ain't a gorilla game. Once we've determined that there is a proprietary open architecture, we must then determine if there are high switching costs. Without them, it ain't a gorilla game. Hope this helps! --Mike Buckley