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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Elwood P. Dowd who wrote (49374)	2/23/1999 9:02:00 PM
From: John Koligman	Read Replies (1) \| Respond to of 97611

Elwood and thread - Thought you might get a chuckle out of this post, courtesy of the Intel thread. By the way, interesting comment by Dell on customers 'delaying' storage purchases till next year in the article you posted... John To: Harry Landsiedel (74348 ) From: Tony Viola Tuesday, Feb 23 1999 7:21PM ET Reply # of 74355 Harry and Intel investors, I got a good "barrel of laughs" from this post containing some definitions of gorillas and kings, out of Geoffrey Moore's book. It's from the G&K thread, courtesy Lindy Bill (btw, I disagree with his calling Intel overvalued, but let it go). Half way down is what cracked me up: Message 7991640 Here are some ideas from the book, "The Gorilla Game", that are designed to help you value "overvalued" stocks like, MSFT, CSCO, INTC, and others. I have quoted directly from, and also summed up, parts of the book. The "Gorilla Game" is a form of growth investing that focuses on High-tech, and specifically on product-oriented companies that sell into mass markets undergoing hypergrowth. GORILLA A company that controls it market because it has a discontinuous innovation ,one that is not compatible with existing systems. The market is in a hyper growth stage, and they control the architecture. There is a high switching cost to using some other company's product, CHIMP A company that tried to become a gorilla but did not get picked. IBM's OS2 is a prime example of a Chimp product. Apple is a chimp MONKEY A company that makes the gorilla's product and sells it for less. AMD is Intel's monkey. Ascend and Fore are Cisco's monkeys. KING The Market leader, properly with a two-times lead or better over its closest competitor. If the lead shrinks too far, the king becomes a prince, and we have a kingless market. Because they lack architectural control, and because switching costs are low, they cannot force competitors onto the defensive the way Microsoft, Intel, or Cisco can. Compaq is a king. Seagate is a king of hard drives. PRINCE A market challenger, potential co-leader. Dell is a prince to Compaq. SERF A market also-ran. These companies fill out the low end of the market. The key thing to remember is that it is easy to confuse a gorilla with a king or prince and get burnt, as happened to a lot of people recently with DELL. A king's power is neither as dramatic or as persistent as a gorilla's, so you have to be much more cautious.