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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: Glenn D. Rudolph who wrote (41797)	4/1/1998 8:38:00 AM
From: Marcel	Read Replies (1) \| Respond to of 61433

Unflatering mention in todays IBD: Kings, Gorillas Are At The Top Of Tech Totem Date: 4/1/98 Author: Michele Hostetler It's a jungle out there in technology - one populated by gorillas, monkeys and chimps. So says Geoffrey Moore in his new book, ''The Gorilla Game.'' But technology also can be a kingdom, where kings, princes and serfs battle for market share. Moore also wrote ''Inside the Tornado.'' This time, his co-authors are Tom Kippola and Paul Johnson. Johnson is the managing director for the Equity Research Department of BancAmerica Robertson Stephens. ''The Gorilla Game'' defines two types of tech markets. One is dominated by a gorilla that rises to power on proprietary products and the high cost customers face in switching to a competitor. Chimps offer a different technological approach from the gorilla. Monkeys mimic the gorilla. In the ''kingdom,'' there's no proprietary architecture, only open standards. There's no gorilla. Instead, there's a pecking order ranging from kings to serfs. A kingdom market generally is better for customers, though the gorillas prefer their gorilla markets. Moore and Kippola, executives at San Mateo, Calif.-based consulting firm The Chasm Group, recently spoke with IBD about gorillas and kings. IBD: Cisco Systems Inc. is the networking gorilla. Could a shift knock Cisco out of its position? Kippola: Could be. We're starting to see networking technologies get sucked into chips. . . . It could change the game. We're starting to see Intel bringing a lot of technologies into the motherboard. It could take some power away from Cisco. Moore: Cisco entered the market as the gorilla because it rode the opening of the network - the rise of the Internet. To be a gorilla you need to have proprietary architecture that has high switching costs. Many hypergrowth markets are not gorilla games. We call them king-prince-serf hierarchies. They don't have proprietary architecture control. In networking, a very interesting play is 3Com. Their two biggest wins - network interface cards and modems with U.S. Robotics - are open systems, open standards. They're leaders and extremely good at execution, but they're not gorillas. IBD: Could 3Com become a gorilla? Kippola: I think they're more of a king. They're playing at the edge of the network. They're not trying to play where Cisco is strong. Another area is remote-access servers, where clearly Ascend plays and Cisco is trying to leverage themselves. Moore: 3Com did try a gorilla game . . . in the U.S. Robotics side of the house, with the 56K modem technology. They came out with a proprietary architecture, seeking control over that space. The market is very sensitive to any gorilla attempts, because it knows the consequences can be significant. In this case, the Rockwell-AT&T initiative caught up to the U.S. Robotics initiative. (A compromise 56K modem standard was accepted in February.) IBD: Cisco has targeted Ascend's stronghold of remote access. Will it win? Kippola: I think Cisco is probably going to give Ascend a run for their money. It remains to be seen how well Cisco can leverage themselves. Moore: But Ascend's business is a pure king-prince- serf business. In remote-access servers there's no proprietary architecture. Therefore the switching costs (for customers to go to a competitor) are much lower. Ascend is in a hard position to maintain because they don't have high switching costs. The way gorillas like Cisco tend to grow is they don't become a gorilla in every market. They become a gorilla in a core market. They use that power to become kings in other markets. In fact, this is the discussion that (Attorney General Janet) Reno and (Sen. Orrin) Hatch want to have with (Microsoft CEO Bill) Gates about how you play that game out. To us it doesn't appear to be an illegal game. It appears to be a highly tilted playing field. IBD: What's your take on Microsoft and its alleged monopoly? Moore: The key thing about that monopoly is the enabling technologies. It isn't just that the one who has the winning technology played well. The entire marketplace conspires to go to a single standard. Where I think there may be legitimate issues . . . happens when Microsoft says . . . ''To get the price that you want, you can't put our competitor's products anywhere near us.'' IBD: Will Oracle Corp. maintain its gorilla stance in databases? Moore: Oracle has won. So why did they take a big hit in the last year? Part of it is that the relational database market is slowing. The gorilla is rarely threatened from inside its category, but rather from outside. Microsoft comes in with their low-end database. People are asking where Oracle is going with their low end. The short-term answer seems to be services and applications, not databases. But its core power is in databases. We think they have to make a move there. Oracle has a lot of problems with the low end. They're not good at channels or brands. Of course, that's Microsoft's strongest play. I think the market right now is discounting Oracle's growth position. The market is saying, ''The two biggest Oracle initiatives in the past four years have been video servers, which went nowhere, and network computing, which looks like it's going nowhere. So why aren't you doing more with your core database?'' When Novell didn't improve it's core stuff, it lost out to Microsoft. When WordPerfect and Lotus didn't improve their core, they lost out to Microsoft. So the market is asking Oracle, ''Why aren't you the next victim?'' --------------------------------------------------------------------------------

To: Glenn D. Rudolph who wrote (41797)	4/1/1998 8:41:00 AM
From: Jeff Jordan	Read Replies (2) \| Respond to of 61433

1. Glenn - (41718) uhhh; ummm. Is there something you want to tell us about this Tiffany person? Jack, This Tiffany person has been lurking on SI for a long time. She knows the personalities and the stocks well. She feels intimidated by the mostly male involvement here. She has a lot of information to offer which has been emailed to me right along. She may become an SI member I to know Miss Tiffany. And Can't believe she hasn't signed on full time yet either. I'm sure as a long time Ascend stockholder she will be very welcome here! Jeff