Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 60
This is all about the gorilla game in relation to Flat-Panel Displays (FPDs) and the potential impact of developments in Organic Light-Emitting Diodes (OLEDs). Let's start with a few extracts from some of MStew's recent posts:

#402, 1-8-00 (http://boards.fool.com/Message.asp?id=1360002000106000)
I am wondering is what other's opions are regarding regarding the flat panel display market. With the advent of OLED (organic light emmiting display) technology--could the be a mist growing within which one might find a gorilla?

#426, 1-9-00 (http://boards.fool.com/Message.asp?id=1360002000106005)
I don't know if the technology is open yet but there certianly some proprietary ones (the above companies tout there patents) One thing is certain, the chasm still lies in front of this technology so the issue I am focusing on is whether this has potential as a displacing technology in this industry NOT on who may be a gorilla.

#471, 1-15-00 (http://boards.fool.com/Message.asp?id=1360002000112000)
It is beginning to look to me like there is the potential for Gorilla breeding here. There are a whole lot of monkey's and chimps in the current marketplace though. And TFT LCD looks to be on main street. I don't think think that we have approached the early adopters stage with the alternative technologies yet and the chasm is not even in view.

#551, 1-21-00 (http://boards.fool.com/Message.asp?id=1360002000137000)
I am beginning to believe that the chasm may be forming. Early adopters are placing orders and making investments. Bowling alley coming?? I'm watching.

A few observations of my own:

(1) The post on Jan 21 was, sadly, MStew's last significant post on the subject. Since then, there has been a little thread follow-up, but nothing substantial. (One reason for making this post is in the hope of stirring up some further discussion.)

(2) There have been a couple of significant recent developments in the technology. In early February, Cambridge Display Technologies Ltd (CTD) announced (http://www.cdtltd.co.uk/NR-seclicense.htm) a cross-licensing deal with Seiko-Epson to produce the world's first full colour plastic television in the first quarter of 2000. At the end of February 2000, Universal Display Corp announced (http://www.universaldisplay.com/press.shtml?000229) improvements in materials and techniques for the manufacture and production of then next generation of FPDs.

(3) One of the more important OLED contenders, Universal Display Corp (ticker: PANL), has seen its stock price move from <$5 November last year, to $10 during December, to $15 during January and February. Last week the price doubled, closing at $28.50.

(4) As discussed in OnAJungleHunt's thread (http://boards.fool.com/Message.asp?id=1360002000299000&sort=id), the Market seems to be valuing potential gorilla game candidates earlier and earlier. There is evidence of this happening in the (pre-tornado) superconductor market, where the three main players have all experienced stock price appreciation which is massively higher than any growth in sales.

Moving on to the somewhat thinner ice of opinion, I would like to suggest that flat-panel display technology is, as far as OLED is concerned, approaching the start of a tornado.

Tornadoes occur when - and only when - a new value chain comes into existence.
Sales channels and end users are already in existence. The only missing link - the technology for the products - may well be bridged soon (see (2) above).

1. Can this value chain develop into a tornado mass market?
The mass market part is straightforward. The most obvious immediate markets are displays for mobile phones and PDAs. Longer term, even the CRT may be replaced. The more difficult part of the question refers to the tornado. The signs are certainly there, in particular the combination of customer continuity (benefits of OLEDs: greater brightness, faster response time for full motion video, fuller viewing angles, lighter weight, greater environmental durability, more power efficiency) with vendor discontinuity (the new technology). In addition, the pressures of hypergrowth can be withstood, because, once technological capability has been created and licenced, "independent solution providers can produce effectively identical results without communicating directly with each other." When this hits, it will be a substantial tornado.

2. If so, what conditions are currently holding it back?
Currently there is no real value chain due to the lack of a physical product to form a mass market. The constraints here are threefold: development of required technology; dispersion = licensing of technology; manufacturing capability.

3. Are these constraining conditions likely to be removed?
IMHO, yes. Firstly, substantial work is being done in this area, with significant recent developments. Secondly, the FPD industry is characterised by numerous partnerships and alliances and also licensing agreements. Finally, existing FPD manufacturers are well-positioned to move into OLED manufacturing. Should they need any further incentive to do so (in the event of reluctance due to surplus LED capacity), the threat of losing market to new entrants (eg PlastDisplay, which appears to be a jigsaw waiting for the missing piece of technology) should suffice.

4. If so, when is the last remaining condition likely to be removed, and by whom?
Technically, the last remaining condition will be product manufacture. But a very likely domino effect means that, effectively, the last remaining condition is the necessary technological development. As to by whom, I don't see that it's possible to predict that at the moment (though more informed views are most welcome). But, surely, the answer to this should not be a requirement for a tornado watch - the main thing is to keep an eye on market developments rather than one specific company.


So what? At some point, we are going to move into the next generation of flat-panel displays, there will be hypergrowth and a tornado, and a gorilla game may emerge. What's the big deal?

Well, for one thing, the market's anticipation of tornadoes and simian antics implies the future likelihood of rather lower returns from classic gorilla "buy at the start of the tornado" strategy than have been historically available. However, we can recapture some of the lost returns by buying earlier, if (1) we can identify the relevant basket of stocks and (2) we can determine the likely amount of time to tornado formation. (It is possible that the recent appreciation in PANL is due to this sort of strategy.)

For another, there is a pretty substantial pie at stake. Mobile phone displays, PDAs, laptops, desktops, televisions, domestic appliances - and those are just the obvious applications - represent a huge and growing opportunity. Factor in less obvious but equally possible applications (watches, clothing, windscreens, windows, billboards etc etc) and you have a market which will encourage the technology to support hypergrowth for a substantial period of time. Universal Display says that "OLEDs are seen as the future replacement technology for the $40 billion electronic display market" - and that's without new applications.


So... is it worth getting some more in-depth discussion going?

For anyone interested in investigating the technology / companies further, I quote from MStew again: "The companies involved that I've discovered so far are:
Eastman Kodak, Planar Display, Idemitsu-Kosan, Universal Display Corporation, Pioneer, FED Corporation, Light Emitting Polymers (LEP), Cambridge Display Technologies', Uniax Polymer Electronics, Seiko-Epson, Hewlett Packard , Philips Components."
I would add PlastDisplay and Covion Organic Semiconductors to the list.

Looking forward to responses,

Mac

PS - Disclaimer / disclosure / confession: I own none of those mouth-watering acronyms which typically grace posts on this board. My portfolio is limited to a collection of utterly un-hairy UK stocks - though I hope to be able to remedy this by buying US stocks in the near future. This is my first post here, so feedback and suggestions would be most appreciated (give it to me straight - thick Scottish skin!). And - as is probably evident - I'm relatively new to both the worlds of OLED and The Gorilla Game. (But they are both fascinating!) Finally, I hope I've given something back in return for the terrific value I've got out of this board.
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.