saukriver,
<< None of them addresses the fact that Intel traded proprietary control of the CPU architecture for ubiquity when it licensed the x86 architecture to AMD >>
Well, you and Lindy, and GM and I, are in very fundamental disagreement here.
The trick is not proprietary (or closed), but proprietary and open, and that is the gorilla advantage that Intel realized when it licensed its architecture, not just to AMD, but several of its competitors, just as Qualcomm did when it was still and infrastructure and handset manufacturer, and as they still are doing as a (fabless) chip maker.
<< There must be something more to the argument that Intel is a gorilla than (1) the book says they are a gorilla, (2) if you were too stupid to read the book, even the chapter headings in the book suggest it is a gorilla >>
I suggest once again that you are rewriting the manual, not just questioning one of the most frequently referenced examples Moore uses to describe the Gorilla advantage and what constitutes a gorilla.
Even if I had not read Moore's "Chasm" and "Tornado" and Ferguson and Morris's "Computer Wars" (who/which as Moore points out were the first to point out the importance of architectural control to market place power and which Moore also states "we are proud to appropriate)", I would let Gorilla Game speak for itself on the fundamental importance of control of "Proprietary Open Architectures with High Switching Costs", exemplified by Intel.
<< Why not be equally suspicious of how quickly he annointed Intel? He was too quick to conclude Intel is a gorilla and in that instance should have applied his own criteria more rigorously. >>
Moore was not quick to anoint Intel a gorilla. He used their example (and several others) to build an investing theory called the "Gorilla Game", 7 years after publishing his first book, and 2 years after publishing his second, and building upon the theories therin he expands them into investing theory.
<< There must be something more to the argument that Intel is a gorilla than .... (3) like gorillas, Intel has a pile o' cash, (4) like many gorillae, it is spending a lot on R&D, (5) Intel has a history of strong management, or (6) INTC performed very well in the first 8 months of this year. None of those is an argument that Intel is a gorilla. >>
I agree.
... but LB's hypotheses or opinion that Intel is dead money for the foreseeable future ("I looked at the INTC situation, and decided that it would take a year for it to get over that earnings warning"), is not a qualification for disqualifying Intel as a past or present Gorilla. It may be sage investing advice (short term), but it is not an application of gorilla gaming theory anymore than the above 4 points you reference are.
Likewise "One rule I have that is pretty standard, Sell on a warning. I know now I made a mistake buying back in", is not a bad rule and one I (like Lindy) have applied it many times, but in and of itself it is NOT gorilla gaming. and I apply it sparingly to Gorillas as opposed to Kings. In this instance (unlike last year) I consciously made a decision not to sell INTC on warning. I made the same decision earlier this year when Qualcomm first warned because I had already taken down my position 25% at 180+ (some of the cash later going back into INTC as well as SEBL & NTAP), and I made it again this summer when Qualcomm warned again because I had taken it down another 25% at 135+ in the spring.
But we are NOT talking about whether to buy, sell, or hold an individual company, we are talking about what constitutes a gorilla.
So as for Lindy's "It was forced by IBM to license to AMD, and that made it a King, IMO", I remain in fundamental disagreement with him and obviously some of my other esteemed threadmates, as to what constitutes "Proprietary Open Architecture with High Switching Costs" (page 52 RFM), exemplified by Intel and others, which is the essence of a gorilla and its power.
This 3.25 page section of the FM or RFM is the essence of the gorilla game. Eliminating the better part of 3 paragraphs from this section changes the game. Excluding a company like Intel from having a "proprietary open architecture with high switching costs" because it publishes or licenses its architecture (whether forced to or not) completely changes the game.
As Geoff says:
Having proprietary open control over an architecture at the heart of a tornado market represents the acme of gorilla power. Microsoft has it, Intel has it, and Cisco has it and all their market caps reflect it.
When I explain Gorilla Game concepts to an investor that has never read the manual, before I mention a gorilla company, they will most typically query. "Oh, you mean like Intel, Cisco or Microsoft?" and some will add ... or Oracle?"
<< The first half of TRFM is pretty solid in laying out the method of analysis ... the second half is weaker in application >>
I agree in re the first half, and for anyone that has read "Inside the Tornado", Chapter 3 og TGG, Understanding Gorilla Power: The Nature of Competitive Advantage", with its frequent references to Intel, is the most important chapter in the book, IMO, although Chapters 6 to 10 (in the 2nd half of the book) are pretty darned important.
<< Chapter 12 smacks of "making it up us as we go." >>
It does. Its another game. It is weekly developed as was its treatment of those Gorilla companies in the first manual. I'm not into Godzilla's.
- Eric - |
