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

To: techreports who wrote (31021)	9/3/2000 6:47:22 AM
From: FLSTF97	Respond to of 54805

Wind I'd like to offer some general (since I know nothing about embedded OS) observations on Wind. I believe that we can push the definition slightly and characterize the various Wind Products collectively as enabling software. From what I've read it seems that Wind is the first one (discounting in-house products) to provide a whole product in that they have the OS, development tools, and testing tools. This plays to the "time to market" mantra so common to not only the technology market place but also commercial products. If a company is developing a product it has this choice: do I save several hundred hundred thousand $ by using my resources to develop OS development tools, an OS and the debugging tools and then write the product application in that OS or do I apply the talent to getting the end product to market faster? Given an existing market or an imminent one, the latter choice should effectively drive the starting returns on the CAP much higher. If the market is large enough, then those returns are likely to far outweigh the cost savings of purchasing the OS suite. Even though I doubt that there is anything specific to Wind OS's that make them functionally superior to other OS's for a given app (like cable modems or abs braking systems), I do think we are observing the general customer base gravitating to a de facto standard of the market leader's OS based on the whole solution and time to market pressures. I think the latter point is becoming reinforced by the customers' abilities to hire talent already "trained" on this "standard" from an ever growing pool of talent. Even if Wind is not alone in the "whole solution" offering, I think we would agree that they are far larger than number two (due to recent purchases, I'm not even sure who this might be now.)I think this alone will accelerate the growth of the talent pool, further cementing the market leadership position. So the question is where the heck is Wind on the TALC? Since I've chosen to define them as offering "enabling software" The Manual says to wait for the Tornado. What is the metric for this Tornado? Design wins would seem like an appropriate measure, but by that measure the Tornado would have been spawned long ago even without a "whole solution". Not that 40% YOY is disgusting performance, but somehow it seems like it should have been more. Perhaps the lack of a whole solution caused a long gestation period (2+ years?)for the previous design wins. If so, then one would expect a general acceleration in the top line growth in the next several quarters since the "whole solution" is a very recent event. In fact, I suspect that the "whole solution" will not become fully integrated until Wind merges the OS's (by late this CY if I remember correctly.) If this pans out, then I would guess that Wind is in the latter stages of the bowling alley. I would also caveat that my above argument is somewhat weakened by the fact that currently reported rev. result from essentially two OS's.If they really are fully merged, does that create an opening for competitors in that Wind will have a "new" OS that must be learned by the talent pool. Unfortunately I can't judge how different the new product will be and how much of a learning curve it might present. I suspect that they are smart enough to minimize this risk, but this aspect should reinforce the element of risk in investing pre-Tornado. FATBOY

To: techreports who wrote (31021)	9/3/2000 9:31:46 AM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

techreports, I do not have an understanding of WIND product though I have a peripheral view because of following the company a few years ago. >>how come people are not taking the same amount of risk with WIND that they are with GMST? Possibly I can offer some anecdotal evidence that applies at least to my situation. First, I have no need for another stock in my portfolio so I have no need to own both WIND and the Gem. Second, I think many people, especially the carpetologists and other non-techies of the world probably find it a lot easier to understand Gemstar products, how they will be used, and why. If that is the case, not understanding WIND products makes it a LOT riskier investment. Third, if there is just one other person on the planet (who I have yet to encounter) who I can confirm that they agree with me that part of Gemstar product is applications-based, that alone makes a pre-tornado investment in Gemstar less risky than a pre-tornado investment in WIND enabling technology. --Mike Buckley