Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: EnricoPalazzo who wrote (38001)	1/15/2001 10:56:24 PM
From: Uncle Frank	Read Replies (1) \| Respond to of 54805

>> Murdoch's huge stake in the company is troublesome. As is Malone's. They make me feel like I'm at a poker table in Vegas, and am bracketed by 2 professional gamblers. I've found that to be a losing proposition at 7 card stud; why should it be any better in investing? Another concern is that gmst is no longer a pure play in the ipg sector. They have to counteract the baggage of off-track betting, publishing operations, etc. As a result, they no longer post a profit, but rather have to resort to ebita presentations - yuchh. cuf

To: EnricoPalazzo who wrote (38001)	1/15/2001 10:56:47 PM
From: DownSouth	Read Replies (2) \| Respond to of 54805

INTC and MSFT have tanked. But I don't see people questioning their Gorilla status The debate about INTC goes on. I have INTC in the royalty column. Maybe the real psychological problem here is that people have trouble thinking a) GMST is a Gorilla, and b) GMST may not be such a safe investment, both of which statements have become clear this past year. I believe the problem here is that GMST is playing in some potential gorilla games, but the products that play in these games have not tornadoes. The products have characterists potential gorilladom, but until the tornado spins, GMS is "not such a safe investment". First of all, I like to think of Gorillahood as a question of degree. I think you have degree of gorilladom confused with the product's place on the market development continuum. That is a common mistake. GMST products may have crossed the chasm, but may still be in the bowling alley. The tornado is next, if it happens. Unlike MB (and apparently GM), I think that a company can be a Gorilla without a Tornado. I wish I had TFM with me, but I am afraid you are wrong "by definition". If there is no tornado, then the Gorilla never developed, even though the product had the characteristics of a potential Gorilla. There was to rapid market growth. ds@justbeingargumentative.edu

To: EnricoPalazzo who wrote (38001)	1/15/2001 11:05:36 PM
From: NY Stew	Read Replies (1) \| Respond to of 54805

ardethan, a) Weak "control" of open architecture This is the last one I wrote, but I bumped it up because it's important. As with any other "Gorilla" that makes its money from licencing broad patents to others, it doesn't have as much control as we'd like to shift the architecture in its favor. Gemstar's barrier to entry has caused Microsoft, AOL, AT&T, Motorola and others to incorporate its architecture on a long term exclusive basis. Time Warner, Comcast, Charter, Adelphia and Cox are taking a tough stand during the negotiating process however have deployed its technology in over a million STBs. It is my belief that this company has sufficient control. In fact, some claim they have too much and filed suit. Bill Gates himself stated that it is the most unassailable portfolio of intellectual property that he has come across. Stockhawk's post is worth a reread. Nothing fundamental has changed with the company. With the deteriorating confidence in technology I suspect that polls of other companies would yield similar results. Regards Stew

To: EnricoPalazzo who wrote (38001)	1/16/2001 1:51:42 AM
From: Mike Buckley	Read Replies (3) \| Respond to of 54805

ardethan, I admire your ability to come to a disciplined, detailed opinion about the strengths and weaknesses of Gemstar. I don't agree with everything you mention, but your clarity of thought is impressive. Now for the points of contention, if you don't mind. :) [Gemstar] doesn't have as much control as we'd like to shift the architecture in its favor I disagree entirely about that. I believe the architecture is shifted in its favor. For me, there are two issues that might cause some to think Gemstar can't "cause" the architecture to shift more rapidly. The first is that the number of television channels is currently insufficient to render an IPG an obvious need by the mass market. Henry Yuen has been very clear about his thinking that at the current number of channels, an IPG is a luxury. He figures 300 channels is the benchmark at which users will think an IPG will be "needed" and that at 500 channels it becomes an indisputable need. YOu were right when you wrote that "Gorillas born in the Tornado tend to solve a compelling need (hence the rapid adoption)." There is no compelling need right now. The second issue is that an IPG isn't continuous enough for the end user. (Remember that the ideal innovation is discontinuous to all members of the value chain except the end user, for which it should be a continuous innovation.) People aren't familiar with the concept of manipulating their television enough that they can immediately and warmly embrace how an IPG might improve their viewing experience. We've got all sorts of anecdotal evidence from users that they'd never do without an IPG having used it once, but it didn't seem particularly important to them until they owned a television that had an IPG. In fact, I think it's an understatement to say that an IPG isn't continuous enough for end users; more accurately, the real problem is that it's too discontinuous. If end users could buy an add-on that allows an IPG to be used, the product would become adopted at a much faster rate. Instead, end users have to buy a new television to be able to get an IPG. Even if people were in love with the idea of IPGs (which they aren't), buying a new TV to get one is analagous on a different monetary level to buying a new car to get a better radio. So, I would caution everyone not to confuse the lack of a compelling need or the lack of end-user continuity with a lack of control over the architecture. I think a CEO with a greater sense of the importance of critical mass in such a device would have tried to push [e-books} out at a much lower price than they appear to have done. Just the opposite, I think the price they initially came out shows that Yuen and his competition understand the importance of getting the price as low as possible as quickly as possible. It's fairly unusual that an entirely new electronic product line comes out with such relatively low prices. At this point, I believe the relative lack of content is a bigger obstacle than the price of the product. All in all, I think we tech investors tend to want products to be adopted much faster than is reasonably possible. Immense patience is required. It's my thinking that once an investor has spotted a likely product category in which to invest, the most critical aspect is figuring out at what point in the adoption life cycle s/he feels most comfortable investing. If we invest prior to the start of a tornado, immense patience and discipline is required, the latter because the tornado may never form. --Mike Buckley

To: EnricoPalazzo who wrote (38001)	1/16/2001 12:35:48 PM
From: StockHawk	Read Replies (2) \| Respond to of 54805

You suggest that sentiment about GMST has changed because its stock price has fared poorly. And yet, QCOM hasn't done so hot either. INTC and MSFT have tanked. But I don't see people questioning their Gorilla status Really? I think we have seen more QCOM questions since the stock has lagged and certainly the INTC debate seemed to heat up as the stock melted. However, I was talking more about the iffy companies, the ones that have not demonstrated gorilla power for years. Take that example I used about the two drawings. Consider QCOM as the first drawing. It is assessed, it is determined to be a gorilla, its stock price rockets higher, money is made, people are happy. Next up GMST. It looks like a gorilla too, a bit earlier perhaps, but that's good - we get to make more on the inevitable way up. Perhaps those who missed on QCOM can catch this train, after all, the formula works. Yes, this too looks like a gorilla. Alls we need is a seminal event, like the Ericsson capitulation, if they can just beat that damn TV Guide, that will be the signal, lets rock and roll. You don't think there was at least a little of that going on? Seeing in the second picture a resemblence of what was seen in the first? Or perhaps not, I may just be spewing a lot of hot air. StockHawk