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Insight and Analysis for Tech Media Pros
For business titles, overseas presence and market projections are
key. Sixty percent of Wall St. Journal reporter David Pringle’s analyst
quotes were from Gartner, but they
all referred to cell phone market
projections, mostly in Europe.
Source: SWMS/Biz360
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Tier 1
Tier 2
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“Brand is very powerful for IDC
and Gartner,” said Carter J. Lusher,
master strategist for SageCircle, a
Broomfield, Colo.-based firm that
tracks industry analysts. “Also,
reporters aren’t experts on the
analyst industry, nor do they spend
any time researching the analyst
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Are Gartner and IDC really that
good? Why do they dominate? Are
their analysts that much smarter?
Sheer size allows Gartner and
IDC to build expertise in areas
beyond the reach of smaller firms,
but journalists rarely take note.
Gartner’s G2 practice, for example,
focuses on macroeconomic and
business trends that impact technology decisions. Boutiques can’t
offer that, but reporters rarely seek
out GartnerG2 analysts.
��
Out of 10,829 industry analyst
quotes published in IT, network and
business titles during the past 12
months, Gartner analysts produced
3,290 of them, IDC 2,999. Everyone else lagged; see the pie chart.
industry. Thus, while knowledgeable analysts may exist at small
firms or boutiques, reporters don’t
know they exist and don’t know
how to find them,” Lusher said.
��� ��
It should come as no shock that
Gartner and IDC ranked neckand-neck in recent SWMS/Biz360
research.
Tier 1 Industry Analyst Quotes
10/19/02 thru 10/19/03
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Are Gartner, IDC That Good?
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Source: SWMS/Biz360
Few Boutiques Enjoy Clout of
Tier 1 Industry Analyst Firms
So much for boutique mystique.
Recent SWMS/Biz360
research shows that
Tier 2 industry analyst
firms garnered far
fewer industry analyst
quotes than did Tier
1 firms during the
past 12 months,
especially in network
and business titles.
While Tier 1 produced
10,829 quotes, Tier 2
produced only 2,802.
As you can see in the
stacked bar chart to
the left, IT publications quoted analysts
most. Across both
Tiers 1 and 2, IT titles
published 74 percent
of all quotes during
the period.
Network titles gave
industry analysts only
18 percent of their
visibility. Business
pubs gave even less
— only eight percent.
Most of those quotes
came from Business
Week and the New
York Times, who
license syndicated
online material from
CNet News.com.
Find lists of Tier 1
and 2 industry analyst
firms, as well as IT,
network and business
titles, on page 2 of
this PDF.
©2003 Sam Whitmore’s Media Survey. All rights reserved. This PDF contains site-licensed material. You may forward this document under limited conditions. Read our usage policy at http//www.mediasurvey.com/public/pdfusage.shtml
Network World’s Use of Industry Analysts
Reveals Priorities in the Newsroom
Tier 1 Industry Analyst Firms
AMR Research • Forrester • Gartner •
Giga • IDC • Meta • Yankee Group
Tier 2 Industry Analyst Firms
Burton Group • CIMData • Current Analysis • D.H. Brown &
Assoc. • Delphi Group • Enterprise Storage Group • Farpoint
Group • Ferris Research • Forward Concepts • Illuminata
• In-Stat/MDR • Infonetics Research • Jupiter Research •
Nucleus Research • Probe Research • Robert Frances Group
• Spire Security • Summit Strategies • Technology Business
Research • ZapThink
IT Titles
Baseline • Byte and Switch • CFO • CIO • CIO Insight •
Computerworld • CNet News.com • CRMDaily.com • CRN •
eWeek • Federal Computer Week • Government Computer
News • InformationWeek • InfoWorld • InternetWeek.com
• InternetWorld.com • Light Reading • Line56.com • Linux
Journal • Linux Magazine • Network Computing • Network
Magazine • Network World • NewsFactor Network • PC
Magazine • PC World • SearchCIO.com • Searchstorage.com •
SearchSecurity.com • TechWeb • Transform
Network Titles
Broadband Week • Byte and Switch • Communications Convergence • Communications News • Computer Telephony •
Fiber Optics Online • Global Wireless • InternetRetailer.com •
InternetWeek.com • InternetWorld.com • Laser Focus World
• Light Reading • Network Magazine • Network Computing
• Network World • Satellite Broadband • Tele.com • Telecom
Business • Tele Connect • Telephony • Unstrung • Wireless
Week • Wireless Review
Business Titles
Business 2.0 • BusinessWeek • CNBC.com • CNN Financial
Network • Fast Company • Forbes • Fortune • Fortune Small
Business • Fox News • Harvard Business Review • Inc. • Individual Investor • MSNBC News • New York Times • Newsweek
• TheStreet.com • Time.com • U.S. News Online • The
Economist • The New Yorker • Wall Street Journal • Wired
Notes: Yes, we omitted Aberdeen, a firm in transition. We
may add it next time in Tier 2. We included Byte and Switch,
InternetWeek.com, InternetWorld.com, Light Reading, Network Magazine, Network World and Network Computing with
the IT titles as well as the network titles. We didn’t consider
the IT newsweeklies to be network titles. It’s sometimes
difficult to draw the line. Send your comments here.
SWMS/Biz360 this month zeroed in on Network World — a
title known for its interest in
analyst opinion — to measure
analyst firms’ reputations.
Which ones will reporters
quote? Which will they avoid?
The table below lists the
reporters who quoted Tier 1
analysts most often during
the past 12 months and how
many times they quoted them.
Network World
Tier 1 Quotes
Deni Connor
74
John Fontana
68
Denise Dube
59
Jennifer Mears
59
Denise Pappalardo
14
With the exception of Denise
Pappalardo, who covers
telecom service providers, the
reporters on the list sought
Tier 1 analyst expertise for
their articles, on average,
more than once a week.
The next table lists the five
Network World reporters who
quoted Tier 2 analysts most
Deni Connor
John Fontana
Denise Dubie
Jennifer Mears
Denise Pappalardo
AMR
0
0
0
1.3
0
Network World
Tier 2 Quotes
Jim Duffy
63
John Fontana
41
Deni Connor
28
Jennifer Mears
21
Robert McMillan
14
developed trust in in my 18
years as a reporter in this
industry. I consider them
knowledgeable, insightful
and objective — they aren’t
talking heads for their paid
clients (usually).”
frequently. Topping this list is
Jim Duffy, who doesn’t even
show up on the Tier 1 list.
Duffy is managing editor of
“The Edge,” NWW’s service
provider equipment section.
While Duffy bodyslams analyst
firms in general, he clearly
exudes little confidence in
the telecom analysis services
offered by Gartner, IDC, Meta
and Forrester/Giga.
Pappalardo’s low Tier 1
quote total over a 12-month
period, coupled with Duffy’s
preference for Tier 2 quotes,
seems to reveal Network
World’s collective opinion of
Tier 1’s leadership in telecom
analysis.
Whom did Duffy quote? He’s
a big Current Analysis fan,
quoting the Sterling, Va.
firm 44 percent of the time.
Infonetics Research got almost
30 percent of Duffy’s respect
and attention.
“I quote [Mark] Bieberich
from Yankee often (I guess
not often enough for this
poll!),” Duffy told us in an
e-mail. “The analysts I quote
follow [telecom] exclusively,
versus the enterprise-focused
participants in your Tier 1 list.
I also quote analysts I’ve
Forrester Gartner
3.3
11.4
8.9
27.8
15.9
26.1
16.9
29.9
8.8
11.8
Giga
5.7
2.2
7.2
9.1
23.5
IDC
31.7
26.7
7.2
26
19.1
Are you an AR pro looking for
leverage when it comes time to
renew a service contract with
a Tier 1 firm? Are you now
on the sidelines but thinking
of entering the game? SWMS
suggests looking at who
influences the influencers.
You might be surprised.
Meta
4.1
13.3
31.9
5.2
11.8
Yankee
43.9
21.1
11.6
11.7
25
Percent
100
100
100
100
100
A Bit about Biz360
By continuously aggregating information across all media from broadcast to message boards,
Market360 empowers decision makers to objectively measure, understand, and compare how their
companies and competitors are perceived in the media.
Biz360 is a marketing partner of ours. It provides us with access to its web-accessible data; we
analyze it and produce research such as the article above.
Biz360, privately held and located in San Mateo, CA, is funded by Foundation Capital, Granite Ventures, BA Venture Partners and Adobe Ventures. Biz360 customers include 3Com, Harley-Davidson,
Hyperion, PacifiCare Health Systems and Verisign Inc. Biz360 can be reached at (866) 424-9360.
©2003 Sam Whitmore’s Media Survey. All rights reserved. This PDF contains site-licensed material. You may forward this document under limited conditions. Read our usage policy at http//www.mediasurvey.com/public/pdfusage.shtml
Why Reporters Quote Industry Analysts
1 ������� � ���� �������� �������� Three Takes
9
on Integrity
8
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2
7
Begin Below
1
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3
Aggressive reporting by Com6
puterworld this month again
the industry analyst
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community under the microscope. Do tech vendors wield
5
2
irresistible influence over the
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5
analysts who judge them?
4
3
SWMS concludes this PDF with
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three essays on the subject,
written exclusively for us by
CIO Magazine executive editor
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SWMS examined 280 industry analyst
Christopher Koch, indepenquotes in Dec. 2002 IT publications to
dent analyst Rob Enderle, and
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determine the value that analysts added to
8
two executives from Knowla tech article. Read this pie chart counteredge Capital Group, an Austin,
clockwise. As we saw it, judging a given
Tex. consulting firm that
9 ������ ��������� ���������
studies industry analysts.
tech market’s momentum was the most
common value-add to an article; macroecoPlease send your comments
10 ������������� ��������
nomic analysis was the least common.
to this address. Thank you!
For Analysts, a Good Personal Reputation is Tough to Keep
10
by Christopher Koch
CXO Media
Special to SWMS
What keeps most good analysts fluttering above the industry’s messy
stew of conflicts of interest are ego and personal integrity. Like good
programmers, they like to be respected by their peers and they love
the ego boost of being a real authority on a subject with customers
and the press. The basic conflict of interest of the industry — that all
these firms have as clients the very companies they are supposed to
be reporting on to users in an unbiased way — is one that most good
analysts can finagle through personal reputation with customers and in
the press. It gives them power to withstand the threats of a vendor (who
is also a client) that got a bad review. But the secondary conflict — that
they must consult with these same vendors to keep their revenues up
— will be the one that sinks the industry if it continues.
There are two basic kinds of analyst consulting with vendors. One
is where the analyst is asked to help the vendor improve its product
or marketing strategy in the background (a conflict, but once again,
finagleable). The second is “white paper” consulting, where the analyst
is hired by the company to produce a report about the company. Good
analysts hate doing these because the vendor inevitably pressures them
to say something good or simply edits it to say something good with
or without the analyst’s approval. Even the best analysts need direct
and open access to vendors to do their jobs and they need to provide
tough, objective reviews to customers and the media to maintain their
reputations. If revenue-starved analyst firms start penalizing their best
analysts because an angry vendor refuses to give them consulting work,
the conflict becomes egregious and unavoidable for the analyst.
Once the reputation goes, there is little reason to maintain your personal
integrity and keep flapping your wings above the stew. It’s too hard.
The good ones will leave, or worse, stop being objective in order to
make ends meet. Analysts who succeed in this environment will be the
Andy Fastows — those who play the system. With the stakes getting
ever higher for companies making technology choices, analyst firms
can’t afford to make biased recommendations to powerful user clients
with good legal departments. If the pressure for revenue continues, the
analyst industry is ripe for an Enron-like blow-up.
Koch wrote “Under the Influence,” a Darwin Magazine cover piece on the
industry analyst business, in March 2001.
©2003 Sam Whitmore’s Media Survey. All rights reserved. This PDF contains site-licensed material. You may forward this document under limited conditions. Read our usage policy at http//www.mediasurvey.com/public/pdfusage.shtml
Industry Analyst Firms Rediscover the High Cost of Integrity
by Rob Enderle
Special to SWMS
If there’s one problem that has driven me nuts as an analyst over the last
few years, it’s the ethics (or lack thereof) that surround our business.
As an ex-auditor, I firmly believe there should never be a situation
where analysts, representing themselves as independent, are put in the
position where they are in conflict of interest.
Conflicts of interest are common in all of the larger firms. This became
all too clear to me when I first started at Dataquest and published the
first accurate forecast of negative product trends. The
pressure from my management and vendor clients to
restore fictional positive forecasts was so painful that I
was easily recruited out of the company.
Currently, based on client feedback, there’s a broad
belief that analysts are just vendor shills hiding under
the veil of artificial independence. Unfortunately,
there’s a lot of truth to this perception. If not
corrected, it will erode the influence analysts have on
buying behavior.
If I wanted to compare today’s analyst firms in terms
of their independence, I’d look into two things: how
the analysts are compensated and reviewed, and what percentage of the
profit, not gross income, the vendor revenue stream represents.
With the exception of Nucleus Research, which has no vendor clients,
almost every major firm throws up a smoke screen of arguments that
suggest vendor revenue is trivial to them. While these companies may
actually believe this, it simply is not accurate.
Were you to look at the analyst compensation a few years ago, you’d
likely find that at least some analysts were mostly compensated on
general productivity. This, to some extent, can shield the analyst from
some of the inherent bias. Today these analysts have a major portion
of their flexible compensation tied to consulting revenue, making it
near impossible for them to remain unbiased. Much, if not most, of
this consulting revenue comes from vendors, and with some interesting
exceptions, most vendors will not hire analysts who have said negative
things about them or their products.
As research subscription revenue from corporate IT budgets has
dwindled, the focus on consulting revenue has gone up sharply; most
analysts have to meet an increasing minimum of consulting days to
get the flexible component of their salaries regardless of their other
output. For many, particularly those in narrow coverage areas, this comes
close to making them vendor employees —effectively destroying their
independence and credibility.
Any MBA will tell you that it’s not the gross revenue
that’s important, but the profit. In the industry analyst
business, vendor revenue goes straight to the bottom
line. So if the analyst firm’s profit was $100K and they
have a vendor that accounts for $200K in annual revenue
(and many are much more), that vendor wields an
inordinate amount of power with the firm: basically it’s
the power of profit or loss.
This power can reflect on pressure that can be applied
through the management chain of command; analysts
with low profiles who don’t bend to this pressure will
likely have a very short career. With non-competes enforceable in most
of North America and a bad economic climate, even high-profile senior
analysts are in a poor bargaining position if they want to push back.
In the end, I truly believe there needs to be substantial reform in this
industry, focused on separating the analysts’ opinions from vendor
revenue; both so it will grow again, and to avoid the same sort of
humiliation suffered by the financial analyst community a few short
months ago.
Rob Enderle is the founder of the Enderle Group, based in San Jose, Calif.
Reach him at [email protected].
‘Buy Side’ and ‘Sell Side’ Firms Have Different Goals, KCG Says
by William Hopkins, Founder and CEO
and Stephen England, Partner
Knowledge Capital Group
Special to SWMS
KCG has always viewed buy side and sell side
industry analysts in very different ways — in
terms of their value to vendors and end users.
It is therefore abundantly clear that the firms
that make most of their revenue (and profit)
from “downstream” end users (buy side)
have very different business models from
those that take all or most of their money from
“upstream” vendor clients (sell side).
significant differences in independence of
thought between Dataquest (sell side) and
Gartner (buy side) — although they are parts
of the same company. The sell side firms
have little or no influence among end users.
The buy side firms wield enormous influence
and justifiably so — they have invested on
average 10-12 years to build a significant end
user subscriber base that relies on them for
inquiry and research note-based advice. And
to be realistic, their lives have always revolved
around taking informational feeds from the
vendors and producing valuable unbiased
views of those feeds.
We would, for example, expect to see
There will never be a black and white answer
on how buy-side firms will allow the ratio of
vendor-to-end user revenue and profit to
undermine their business (or not). We see no
clear evidence of increased bias in reporting
by any of the major firms and most of the
key niche market players. But we do see an
increase in the ways they sell services to the
vendors and the dollars they take from them.
For example, we have seen some top tier firms
offer to write “white papers” for vendors. But,
unlike analysts for hire, they will neither falsely
praise products or companies nor leave anyone
confused as to the difference between this
— a “single-client” study — and one of their
true research reports.
©2003 Sam Whitmore’s Media Survey. All rights reserved. This PDF contains site-licensed material. You may forward this document under limited conditions. Read our usage policy at http//www.mediasurvey.com/public/pdfusage.shtml