Did the earth move for you? No, but the landscape changed…
Like the technology market it supports, the industry analyst business is in a constant state of movement. There is always a new technology to observe & analyse, a new geographic market emerging, a new way of delivering research, new analysts deciding they can do a better job than the incumbents – this in itself is nothing new.
But when you live in a relatively niche market like analyst relations every working day – as I do – you sometimes focus more on the tactical, day-to-day shifts and spend less time thinking about the big picture, and the change that’s taking place over time.
This point came home to me this week when I was co-hosting an Institute of Industry Analyst Relations webinar with my mate and occasional business partner Bill Hopkins, the founder & CEO of KCG. While we sometimes disagree on the detail, Bill & I share a similar “world view” of the analyst & AR businesses. We’ve both worked in AR for well over a decade, we’ve both worked as analysts – though at different firms – and we’ve both spent a long time working in the technology business.
The topic of the webinar was KCG’s Global Analyst Landscape update, with me providing the Asia/Pacific & Japan perspective. There are many differences in the way the analyst landscape looks at a global level and the way it looks in APJ, with some firms actually using different business models in different parts of the world. But there are similarities too.
Some things don’t change
At the global level, it’s interesting to see that the breakdown between sell-side (vendor) revenue and buy-side (end-user) revenue has remained reasonably constant over the past five years at about two-thirds/one-third. But the growth in buy-side revenue last year was about twice that of sell-side revenue.
The other constant was the share of total revenue enjoyed by the Big 3 – Gartner, IDC & Forrester – remains at 56 per cent, about the same as it was five years ago.
Outside of the top players, there are probably another 350 firms slicing up less than half the market between them. Some of those firms are relatively sizable, most are quite small. Some of them cover a range of technology markets, the majority are quite focused. Some of them have a presence in multiple countries, the majority are confined to the US or one or two European countries.
One of the most visible trends over the past few years has been the gradual thinning of the middle layer. Small firms come and go – particularly when analysts leave the big firms, voluntarily or otherwise. But the number of midsize firms has continued to shrink, as the larger firms have acquired competitors before they’ve gained sufficient scale to seriously challenge them.
Asia/Pacific – same/same but different
While it’s impossible to get accurate regional revenue breakdowns, anecdotal evidence would suggest a similar pattern in APJ. Certainly Gartner & IDC are the dominant players in APJ, Forrester less so despite its acquisition of Springboard Research last year.
Certainly there has been a significant growth in buy-side revenues as Gartner has expanded its sales teams in growth markets such as India and China, as IDC has grown its Insights business, and as other firms have capitalised on the increasing appetite for technology advisory in both mature and emerging economies.
And the thinning of the middle layer has been evident in APJ too. Certainly some of the midsize players have a solid presence – Ovum, Frost & Sullivan, AMI Partners have multiple offices, for example – but others have scaled back their APJ activities in recent years.
Gartner’s recent acquisition of Ideas International (still to be finalised) removes the only regional firm which arguably was a global player, with reasonable analyst teams in Australia, the US and the UK. Forrester’s acquisition of Springboard in May last year removed the only organically-grown pan-regional firm.
Nearly all the other firms which have a notable presence on the APJ analyst landscape are primarily focused on their domestic markets. There are firms such as IBRS, Longhaus & Telsyte in Australia; CCID, CCW & Analysys International in China; ITR & Nork Research in Japan; and CyberMedia Research in India, which for 23 years was the IDC licensee on the sub-continent. Yes, some of these firms may stray into regional markets, but the bulk of their research and revenue is driven from their home markets.
I noted in one of my first posts that while technology might be global, influence and insight are local. For that reason, we can expect that many of these local firms will survive and even thrive. Will any of them expand sufficiently to become pan-regional or even global players? That remains to be seen.
What is clear, though, is that AR remains multi-layered. Any AR program that wants to have impact has to engage at a global, regional and country level. That isn’t always easy, but that’s the way you support sales teams and influence purchasing decisions.