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

To: DownSouth who wrote (37033)	12/26/2000 2:26:45 AM
From: Bruce Brown	Respond to of 54805

Craig wrote: From talking to folks in the FC business, there's nothing special about BRCD's offering except its high price and arrogant support staff. That's a difficult biased opinion to wrap anything around without a plethora of supportive data to back it up. Yet, if we approach it from the point of Gorilla & King gaming, we are looking for the dominant players in each respective niche market that we study. Hence, there is a great deal of attraction in finding a company that has dominant market share for their products. The counter argument served up by Craig Siebels that a second or third tier company with only 10% of market share has more 'potential' than a dominant company holding 90% market share seems to contradict most everything related to what it is one hunts for in a gorilla or a royalty game. Unless, of course, that 10% market share happens to be technology that is a discontinuous innovation that will eventually blow the other company out of the water. We could easily review the quarterly reports of the entire FC competitive landscape to see that there are more things on the balance sheets and income statements than arrogant support staffs and biased opinions. Craig also raised the argument that Brocade had no 2Gbps products as of yet. Back in October, when Brocade announced the Silkworm 6400 product, they also announced their roadmap for the 128 port switch and 2Gbps products. brocade.com Brocade also announced today its product roadmap which will extend the Brocade storage networking model to deliver 64-port and 128-port networkable "Core" Fibre Channel fabric switches and 2 Gigabit per second speeds across the entire Brocade product line. To be announced in early 2001, the new products will extend the Brocade networking foundation to support the entire spectrum of SAN requirements—from entry level, to the enterprise, to carrier-class—with one networkable infrastructure based on Brocade's common distributed fabric operating system, Fabric OS™. From my standpoint as a Brocade investor, I certainly understand the implications of the dominant market share leader mentioning that they will announce in early 2001 their entry into the 2Gbps product throughout their entire product line as significant. Whether or not other vendors have announced or even shown samples at recent conferences still doesn't address the important issue of who has the dominant market share, dominant branding and what the industry is centering around. By the way, in one of my earlier posts when I had used the word 'looping' switches together, I believe the word I was really searching for was 'cascading' several switches together. There are some posters I follow on various boards, but a poster named Jaeger is one in the industry that usually serves up some good information from time to time on the Brocade board at the Fool. Even though the past couple of months has been more directed at price, valuation and volatility in richly valued technology issues like Brocade, here's a link to the middle of a thread back in October when a nice discussion of director class, fabric, interoperability standards, demos at conferences, port counts and plenty of matters FC were being discussed before it turned into a 'I shorted at this price, covered here and went long only to short again here type of a discussion....' which quickly lost the interest of most discussion about the technology and underlying game taking place: boards.fool.com You will also find quarterly coverage of the balance sheet and income statement from several on that board (including me) that deal with margins, cash flow, ROIC, etc... . We compare these to McData, QLogic and Inrange each quarter as well. Of course, the Fibre Channel thread here at SI has some good coverage, but there's never been much discussion on the Brocade board here at SI. BB [Disclaimer: I hold long positions in Brocade, Emulex, Network Appliance, EMC and Veritas in the data storage and transfer segments]

To: DownSouth who wrote (37033)	12/27/2000 12:03:20 PM
From: GuinnessGuy	Read Replies (1) \| Respond to of 54805

Downsouth, RE: " Show me the simple math. Give me an example. Prove to me that a company is in a better position if it has 10% of a rapidly growing market than if it has 90% of a rapidly growing market. Include risk versus reward for investors, profitability, and strategic considerations." Note that I said 'theorectically'. This doesn't include mindshare effects that often include the phrase, 'the de facto standard'(that I get so sick of hearing). Obviously, if a company has 100% market share, then it can only grow at the growth of the market, the less it has the more 'potential' that it has to grow in terms of revenues, earnings and margins. You can't take business from yourself, now can you. That was my only point. RE:"A company does NOT achieve 90% marketshare based on high price and arrogancy. You might want to find some folks if the FC business with a bit more insight and less bias." BRCD NEVER had much less than 90% of the market. This is a disruptive technology that BRCD had all by itself for about the first six months that they were shipping. You would agree, would you not, that the higher the market share a company has, the more pricing power it has and the less it has to worry about customer service. Even in the GG book, it says that once a product enters the tornado, then customer orientation takes a back seat to operational excellence. Obviously BRCD feels that they've entered the tornado(or they haven't read the book). What's so hard about that? The source of that observation came from an integrator who works with many OEMs, most of whom sell BRCD switches. Craig