|To: Todd Bishop who wrote (35523)||12/6/2000 9:02:25 AM|
|From: chmang|| Read Replies (1) | Respond to of 54801|
|Juniper : a chimp ? |
I read last week your post which puzzled me a bit. To wake up in the morning and realize that you have put your money in an enabling-technology chimp makes you feel like an idiot.
Yesterday night, not being able to sleep, I went back to the FM and here are a few thoughts :
A chimp seems to be a company which has competed in a gorilla game ( mass market ), has not been picked as the gorilla and therefore retreated in a specialised niche market.
Companies like JNPR or RBAK , instead, are young candidates in the bowling alley. They have adressed a broken business-process in a market segment that was not satisfied by Cisco. I suppose they have been able to do so with a discontinuous innovation( like Junos) otherwise they would not have gained leadership. The future for these companies can be the following :
-They can stay « bowling alley forever » and enjoy a nice Gap and Cap in their limited market but they will never reach gorilla valuation.
-or they can be bought by Cisco or Nortel ..
-or they can extend their value-chain to other market segments and become a gorilla . Paul Jonhson seems to think that the the future of broadband is so huge that these niche markets could eventually become mass markets. How many investors did imagine in 1990 that network routers would become a mass market ? Very few I suppose.
In the FM Cisco case study, Paul Johnson suggests that for every emerging network market, you buy a basket of the new companies and sell them when it’s clear that this is a prince game or that the company you own has become a chimp. None of this applies to JNPR so we can keep it.
The idea I have is to buy a basket of NGN companies which have crossed the chasm, have proprietary architecture and have proven leadership in their market segment. JNPR and RBAK seem to be obvious candidates. We can think of EXTR,FDRY,SCMR…and I hope you networking guys can help us network dummies characterize these candidates.
If anyone thinks this is nonsense, I’ll be happy to hear from you.