Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Mike Buckley who wrote (28953)	7/26/2000 7:30:29 PM
From: Thomas Mercer-Hursh	Read Replies (1) \| Respond to of 54805

In summary, to determine if a gorilla game is being played, ... I'd like to suggest that it is helpful to remind ourselves also that these labels we use -- gorilla, king, etc. -- are not absolute categories that exist in pure form in the natural world. They are categories created by Geoffrey Moore for the purpose of allowing us to better understand a variety of forces, behaviors, consequences, circumstances, etc. No sooner were the categories created than we ran into special cases. Some, like godzillas, seemed to warrant their own more-or-less unique category. Some, like PSFT, seemed to require a footnote of explanation. Some, like MSFT, are the targets of possible new categories that have yet to come into broad acceptance. Recently we have had a tentative new name suggested for JDSU. The fact of the matter is that no business is going to be a pure simple expression of any of these categories, especially one grown large enough to have some internal diversification so that it may be playing multiple types of games at once. Consequently, I think we need to be open to adding shadings to our classifications, rather than arguing too vehemently about whether a particular company falls on this side or the other of the fence.

To: Mike Buckley who wrote (28953)	7/26/2000 8:04:05 PM
From: kumar	Read Replies (1) \| Respond to of 54805

<<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.>> very likely, I am still not clear in my head. In years past, any company that had proprietary control of an open architecture (Cisco : IOS, MSFT : Windows), never licensed the proprietary bits to others in the industry. The QCOM/Spinco deal proposes to license/x-license the proprietary stuff. Assuming "fair play" to licensees, the fact that the ASIC architecture is proprietary makes no difference - others may choose to license to use the same proprietary stuff, and then it could well become a matter of "who executes best". comments ? cheers, kumar

To: Mike Buckley who wrote (28953)	7/26/2000 10:13:26 PM
From: Jack Hartmann	Read Replies (2) \| Respond to of 54805

Mike, Wouldn't the gorilla company for 3G have to cross the chasm? Jack

To: Mike Buckley who wrote (28953)	7/26/2000 11:03:15 PM
From: sditto	Read Replies (3) \| Respond to of 54805

Mike - I think you're missing a subtle point. There is a big difference between a potential Gorilla Game and an actual Gorilla Game. You are very correct in asserting DI, OPA, BTEs, and HSCs are required for a potential Gorilla Game to develop. However, just because one company or market has a technology exhibiting those attributes doesn't mean the only outcome is a market with primate characteristics. The path is slippery and few potential Gorilla Games pan out. <<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.>> As Moore pointed out, companies are aware of the game and are increasingly likely to cry foul when they spy a company trying to create an OPA (while wishing they had done the same). Crying foul can slow the game allowing value chains to react, standards bodies to engage, and all sorts of other competitive responses to emerge and derail the potential Gorilla Game. At the same time, it's also quite possible for two companies to focus on the same market using their different OPAs to establish dominance. Clearly, that's what TXN, NOK, INTC, and others would like to do in the Spinco space. Competing head-to-head may result in a Gorilla Game or may confuse the marketplace, distract the value chain, and create other poor outcomes which also derail the Gorilla Game. <<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.>> Even if the OPA survives early threats the existence of a Gorilla Game is not assured. Moore and Mauboussin believe the selection of a leader may be influenced by random or chance events which could alter the market dynamics. One example given is the situation where a handful of plausible candidates are each jockeying for position. The whole product solution may be completed and the tornado forms just as one company pulls ahead of the others. The new market leader (who may have been a laggard just months ago and may not have an OPA) benefits from positive feedback and pulls further ahead of the pack and derails the Gorilla Game. Another example is an emerging Gorilla that fails to play the game during the tornado (i.e., can't ship product, changes the architecture, fails to consolidate power over competitors) and derails the Gorilla Game. In both the above examples the result is a potential Gorilla Game becoming royalty - not a stalemate or Gorilla Game played in perpetuity.