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

To: Judith Williams who wrote (32447)	9/27/2000 5:28:01 PM
From: areokat	Respond to of 54805

Got a pitchfork handy? You really think he'll give us a clean job?

To: Judith Williams who wrote (32447)	9/27/2000 9:46:50 PM
From: Judith Williams	Read Replies (6) \| Respond to of 54805

Networks Project Update Focus companies: Siebel--Mike Buckley I2 --Bruce Brown NTAP --Down South JDSU --pending WIND --Don Mosher GLBX --Don Mosher YHOO --Don Mosher QCOM --Eric L (potential draftee) Keeping in mind that the various companies being undertaken operate in different markets, may be in different places in the network/technology cycle, and may participate simultaneously in multiple networks, a standard format for the project studies should nevertheless facilitate discussion and comparison of the network effects generated by each guinea pig. This framework is meant to be a general guide. Some sections may not be applicable to the specific company. PLEASE COMMENT ON ANY REDUNANCIES, OMISSIONS, SUPERFLUOUS ITEMS, OR OPAQUENESS Test Format for Networks Project Reports I. Basic Facts Gross Margin Net Margin Cash Minus Debt Cash King Margin Revenue Growth--YOY and QOQ (for three years when possible) Markets and Share Competitor's Markets and Share Competitor's Revenue Growth--YOY and QQQ II. Knowledge/Intangible Assets Intellectual Property Human Resources (compensation, training, acquisitions) Customers (brands, trademarks, cost advantage, focus) Organization designs (process-based advantages, management) III. Investment in Intangible Assets Intangible/knowledge assets don't always come through on income statements and balance sheets at their full strength. What are the core knowledge assets, where has management placed its bets? Quantify--particularly with respect to r&d and sales development, retention and/or acquisition of necessary skill sets/technologies, if possible. IV. Networks in Which Company Participates/Controls Description Effects Direct: when the value of a good changes as more agents consume that good Indirect: when the value of a good increases as the number or variety of complimentary products expands V. Interactivity of the Networks The more contact among end users, the stronger the potential network effects. The S-curve of product adoption is much steeper for an interactive network than a noninteractive network. VI. Compatibility within the Network Transactional compatibility: where compatibility derives from creating a forum for exchange. As the exchange captures the majority of buyers and sellers in a particular space, competing exchanges lose or never reach critical mass. Community compatibility: In networks with direct interaction among members, value grows as more participants join the community. Compatibility from devices: As the function of ancillary devices, services and software increases, the value of the device increases. VII. Adoption Potential The adoption threshold is defined as the number of people who must engage in a network activity before a given individual/group joins the network. Who were key additions in the past, key prospective targets? Clustering: the degree to which the connectors to one node also connect to another Long-range connectors: Are local clusters connected by multiple long-range connectors or more isolated? How dense is the network? Potential adopters, additional nodes VIII. Assessing Growth Demand or supply-side driven: Are the network effects demand-side driven with a best of breed service or dominant product or, as in manufacturing companies that enjoy economies of scale, supply-side driven? Are most costs incremental or fixed? Value creation that comes from surging sales driven by demand-side effects coupled with negligible incremental costs outstrips that produced when supply drives and fixed costs are high. Switching costs: Are they high? Critical mass: If it has not been achieved, when will it be achieved? Critical mass occurs at the start of the tornado. All issues about the constraints to forming of a tornado are critical to discussion of achieving critical mass. Natural monopoly: IP-based networks garner huge market share in a winner-takes-almost all situation. Does a natural monopoly exist? IX. Revenue Sources from the Network and Their Potential Commerce/transactional revenue Advertising revenue Subscription revenue Data-base revenue Royalty revenue Incubation revenue from investments in related companies X. Threats to Network Internal External(technological disruption etc.) Competition