As we know in the technology industry, ideas are the lifeblood of our business. The power of ideas has launched some of the greatest businesses of the past century, including Microsoft, Google, Amazon, Apple, Emulex and dozens of others that were started with a new idea to make life, technology and business better. As we move into a more global economy where manufacturing, logistics and most physical assets have become commoditized, it is ideas, brands and services that are creating sustainable, competitive and market capitalization advantages. The growth of intangible assets as a percentage of company values reflects this growing trend and has shown a direct correlation to market capitalization value.
The chart above from Ocean Tomo shows how the growth of intangible assets has reached up to 80% of the value of companies. These assets include patents, brands and other good will. Ocean Tomo created the Ocean Tomo 300 Patent Index fund to identify and invest in companies with the best ideas. The Ocean Tomo 300® Patent Index (OT300) is the industry’s first index based on the value of intellectual property and represents a diversified portfolio of 300 companies that own the most valuable patents relative to their book value.
Recently, Emulex was added to the Ocean Tomo 300® Patent Index mutual fund that tracks and invests in companies that have growing patents, intellectual property and branding value in their respective spaces. This fund has a history of spotting and investing in companies that are creating new ideas and implementing them in their market to grow company value. This is not to say that every company is not striving for these goals, but not all of them have been able to execute and capture market share to transform those ideas into market value.
In Machiavelli’s The Prince, he said you could judge a man, or company, in this case, by the quality of their enemies/competitors. I would note that Intel and Broadcom, and now Emulex, are listed among the industry leaders with the best ideas on the Ocean Tomo 300 Patent Index, while QLogic and Brocade are not listed. This is one more data point that shows how we are transitioning into a leading I/O company, not just a Fibre Channel company. Our strategy to drive network convergence with 10Gb Ethernet (10GbE) first, drive innovation software such as our OneCommand Vision and gain Fibre Channel share at key technology transitions is paying off in our revenues and in the investment community.
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