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

To: Mike Buckley who wrote (38012)	1/16/2001 2:36:58 AM
From: EnricoPalazzo	Read Replies (1) \| Respond to of 54805

I admire your ability to come to a disciplined... You're too kind. I admire your ability to refrain from buying GMST. Would have saved me about $1000... [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. Not what I meant. I should have been more clear. I'm not questioning whether or not the IPG "architecture" will take hold (I'm not conceding either, I'm just not addressing it). I'm actually more optimistic than you, I think, in that I fully expect IPGs to take off. I have & use my IPG (interactive program guide, right?) all the time--so much that I returned several universal remotes that couldn't control it properly. I find it relatively continuous (I'm a relatively advanced user). I'm also not so concerned about people having to buy more TV's to get IPG's. You get it with some forms of digital cable (like me), which the cable companies are trying to make so continous that you have to choice (amongst other advantages, digital cable is apparently harder to pirate). I think GMST is expecting the usage to double from 10 mil to 20 mil this year. So when I referred to "control [should have said power]... to shift the architecture in its favor", you thought--quite understandably--that I mean "power to cause the IPG architecture to be adopted". Not so. What I meant was this: imagine the world five years from now, when the IPG architecture has taken hold. 100 million americans use IPGs, through their digital cable. Suppose some new technology or service comes along that either a) threatens to marginalize IPGs (think Netscape:Microsoft) or b) create a lot of revenue. If the gorilla is Microsoft, they can just integrate that functionality into their product, and thereby kill the nascent company (and take its revenues!). All of a sudden the architecture has shiften from one with an OS (controlled by MSFT) and a browser application (controlled by NSCP) to one with an OS/Browser (controlled by MSFT). This is a monumental shift if you're NSCP! If the Gorilla is GMST (or any other patent-driven company), I don't see how they can do this. Yes, the cable carriers could integrate the two products if they chose, but GMST couldn't make them. Consider the implications: -Microsoft gets to poach NSCP's revenue (INTC's integration of new functionality into the chips is a better example, since there's actual revenue being expropriated). GMST doesn't poach the new technology's revenue, since the cable operators don't pay them for it. -The cable carriers only integrate these two technologies if they want to. They consider the impact on their bottom lines, not GMST's. So I'm talking about the ability of the established Gorilla to shift their widely-adopted architecture to another one that they control. Not "what can they do now", but "what will they be able to do in five years?" As far as I'm concerned, you don't really control the architecture if you can't change it at will. I think you could make similar arguments for RMBS & QCOM, but I'd be way out of my depth there. Incidentally, I think this whole "Gorilla by licencing patents" is a pretty new-fangled business model, but we have some pretty smart people running said businesses (Q, RMBS & GMST). I wouldn't be surprised if these leaders found brilliant ways to get around the problems I've raised above. Plenty of competent people scoffed at the ability to make money selling zero-marginal-cost software in the 80's. It took a Bill Gates to figure out how (and did he ever figure it out!). All I can say is, it will be interesting to watch. I should also say that I may be exaggerating the importance of changing the architecture at will, since I work at Microsoft which in many ways lives off of that tactic. I do think, though, that it is a *tremendously* useful tactic to ward off discontinuous innovations. Come to think of it, maybe I'm just applying the rigorous "enabling Gorilla" standards to what is ostensibly an "applications Gorilla".

To: Mike Buckley who wrote (38012)	1/16/2001 1:42:57 PM
From: StockHawk	Respond to of 54805

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. Many product adoptions work that way. Most people probably do not even know what an IPG is, and perhaps many have not even heard about it yet. Once they get one however, it becomes a favorite feature. But it is a rare individual who will buy a new TV just to get an IPG, so adoption comes slowly. It is like the story of the self-cleaning oven. Oven makers had the technology for years before introducing it. At first they thought no one wanted it because it never appeared on the wish lists of early focus groups. The reason was that people could not even envision the possibility. Once they were told that it was available, most showed interest, but not enough interest to buy an new oven because of it. But once the new ovens included the feature buyers used it, ;liked it, and would likely not buy another without it. Of course most homes only have one oven and it is replaced when it breaks. But multiple TV are normal and week after week the Sunday paper is filled with photos of large screened wonders and upgrades occur with more frequency. No one buys a new car to get a better radio, but for many car shoppers in the 70's a new car might mean a radio with an FM band for the first time, a tape player, A/C that they never had before, power windows and locks, and better safety features. None is a deal maker, but together they compel thoughts of changing. Bigger screens, clearer pictures, more channels, better programming guides, keeping up with the neighbors. It starts to add up. StockHawk

To: Mike Buckley who wrote (38012)	1/16/2001 9:53:06 PM
From: Rick	Respond to of 54805

"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." There are parts of New York City that have 400 channel cable systems right now. Mine doesn't but there was an article a few weeks ago. Something along the lines of "400 channels and there still isn't anything to watch." Here's a summary I found: "400 Channels and (Click); Digital Television Changes City's Cable Landscape By JAYSON BLAIR There are seven channels of HBO, five channels of Showtime, four channels of Starz and six channels of Discovery. There is ''NBA League Pass,'' ''NHL Center Ice,'' ''WNBA Season Pass'' and ''MLS/ESPN Shootout.'' There is a channel just for westerns a ... December 28, 2000, Thursday Metropolitan Desk , 1656 words, $2.50 - Fred