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Technology Stocks : Wind River going up, up, up! -- Ignore unavailable to you. Want to Upgrade?

To: Richard Knox who wrote (8240)	8/11/2000 3:56:27 PM
From: James Connolly	Read Replies (2) \| Respond to of 10309

Richard, Below are a few extracts from the Motley fool article that I think are important. I think what the article is really getting at without actually saying it is called Metcalfe's law or Network effects (see below). WindRiver with I2O is an almost perfect example of a company in a position to reap the benefits of the so called Standard Bearer. Here are a few reasons why. (I am sure there are many other examples of this within WIND, but I think it's most obvious with I2O) 1. I2O using IxWorks is a network technology hence it follows that Metcafe's law applies to it, i.e., if you want to be compatible with the network then you have to have a compatible OS. 2. I2O using IxWorks has mass adoption. All major computer companies support I2O via the I2O SIG. Most major server OSs now support I2O, with Linux to follow soon. WIND is light years ahead in the "Installed base race". 3. The I2O SIG was set-up in 96, so I2O and IxWorks has been around for about 4 years. 4 years for it to mature. 4. WIND's I2O OS, IxWorks is mainly distributed via VAR deals like the one with Intel. When an IOP ships from Intel a copy of IxWorks also ships with it. Intel then pays WIND a royalty not the OEM. The OEM or developer therefore "Sees" WIND's OS as free !!! so why even consider anything else ? Regards JC. "The Standard Bearer, on the other hand, depends only partially upon technological superiority, and instead looks to other factors, such as mass adoption, interoperability, patents, and government dictum, to build a toll booth somewhere along the network where all companies seeking to use a network including this functionality must pay. Although this business model has existed elsewhere (heavy industry, construction, etc.), it is perhaps the communications network that best lends itself to mass standardization, given the heightened nature of interoperability requirements. Without set or assumed standards, communications networks would be unable to efficiently communicate with one another. Interoperability and Barriers to Entry For a company to become a true Standard Bearer, as opposed to just a propagator of a pretty neat technology, its technology must be squarely situated so that potential customers cannot get around it due to expense and compatibility constraints. Geoffrey Moore calls it "open proprietary architecture," where a company owns a patent or otherwise has a moat built around its technology, which is at the same time the only real choice for customers. Once the Standard has been raised, the Standard Bearer's intellectual property is integrated so deeply into the architecture of the total network that it cannot be extracted without considerable expense and a widely coordinated move" Metcalfe's Law. forbes.com "Metcalfe's Law plays a very strong role in the evolution of the networking industry, especially the Internet. While the Internet itself is the ultimate example of Metcalfe's Law at work, "n" squared is also the guiding force behind many an Internet company's startup plan. You can observe it in action with the "installed base race," that mad dash to sign up, cajole, steal or beg as many customers as possible in the shortest period of time, profits be damned. The game is simple: Build up such a huge base of customers (i.e., increase the value of the network by increasing "n") that no other company can compete. This installed base race--the commercial version of Metcalfe's Law--is the basic concept behind America Online, Yahoo!, Amazon and Microsoft"