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

To: DownSouth who wrote (37083)	12/27/2000 4:29:34 PM
From: GuinnessGuy	Read Replies (2) \| Respond to of 54805

Downsouth, RE: "Craig, if you have RTFM, read it again. You're not getting it. Sorry mate, don't understand the reference to RTFM. Your help would be appreciated. "Taking your statement to the extreme, one would buy the company with a 1% marketshare rather than the company with a 99% marketshare because the former has more growth potential. I don't think so." Low market share is a potential advantage, not a rule for buying...by any means. There is much more involved here, especially in a simian match-up. You take me too literally. For me to favor a low market share company I have to see some attributes in that company that makes me believe that they have a good shot at building market share. Again, would you have rather owned Dell or CPQ back at the beginning of that tornado? Would you have rather owned SUNW or the King, HWP, back in the early server/workstation days. Would you rather have owned Oracle or Relational Technology back in the early relational database days? Some of the logic I'm employing here, ironically enough, was reiterated in the Motely Fools today: fool.com Interesting that you don't believe pricing power is generally more in the hands of market leaders. That leads me to believe that you think the converse is true. That is, that the pricing power more belongs in the hands of those without dominant market share. I like to hear the logic behind that, 'cause frankly I don't get it. "Other factors are as important as market share, such as switching costs, barriers to entry, and market demand for the produts. Any one of these factors can control the pricing power of the dominant provider." Very true statement, but then again, these are factors that lead to market dominance in the first place, no? Specifically in terms of BRCD vs et al, you no longer have a "switching cost" component(due to BRCD's routing protocol becoming part of the open standard). The "barriers to entry" component is also shot down, IMO, since there are now four viable competing companies. The third component, product demand(vs supply) isn't a problem that I've heard(i.e. - no component shortages). And really, doesn't the "barriers to entry component" give pricing power across the spectrum of competitors, so it really isn't relevant to any one company relative to the others. Craig