Do analysts still play favourites?
In the year 2000, IT corporations paid technology analysts $US15 billion a year for analysts’ technology research. That figure has doubtlessly grown significantly since then and this vendor/analyst relationship continues to raise questions about analyst impartiality and conflicts
of interest.
Of course, big IT vendors like analyst commentary that support their own narrative and pay handsomely for such reports. Some companies get analysts to write reports that are underwritten and approved for publication by the vendors covered in the reports. Known as white papers, the reports are published under the analyst company’s name, not the vendor’s, and are used as vendor marketing materials.
Similarly, analysts often write a scathing report that looks like it was written by the opposition. For example, in October 2013, Gartner, in a member-only report, urged clients to dump BlackBerry as their smartphone provider, claiming the company was in severe financial difficulties. At the time, Gartner USA analyst Ken Dulaney said that it would be beneficial for businesses to “put a separate mobile device management system in for Apple, Android and Windows” mobile devices.
Independent analyst Phil Hassey says that analysts, large and small, don’t want to criticise vendors but if they’re being truly impartial it’s totally unavoidable given that one product or service will be superior to another. He also wears criticism from certain vendors like a badge of honour and that he needs to really believe in a technology before he’ll back it.
Taking large amounts of money to write reports for vendors will continue to make it harder for some businesses to evaluate the technology if they perceive a real bias, and until this practice completely ends, questions will continue to be raised about the real objectiveness of analysts.
When experts get it wrong
In 1962 record company Decca famously rejected The Beatles, its rationale being that “guitar bands are on the way out”. In a similar vein, there’s been no shortage of clangers from IT experts over the years.
Home computers? Don’t make me laugh
In 1943 IBM’s president, Thomas Watson, famously said: “I think there is a world market for maybe five computers.” In 1977 Ken Olsen, co-founder of Digital Equipment Corporation, was asked about the potential of home computing. Olsen replied: “There is no reason for any individual to have a computer in his home.”
No dough, no go
In 1995, in a column in Newsweek titled “The Internet? Bah”, renowned astronomer, author, and computer geek Clifford Stoll said internet commerce would never become a reality as there was no safe way to send virtual money. He also ridiculed the possibility of online publishing: “Nicholas Negroponte, director of the MIT Media Lab, predicts that we’ll soon buy books and newspapers straight over the internet. Uh, sure.”
And in the same year, Robert Metcalfe, co-inventor of Ethernet and the founder of 3Com, said: “The internet will soon go spectacularly supernova and in 1996 catastrophically collapse,” part of his rationale being that it lacked the speed and capacity to be sustainable.
Why, oh why $300bn for Y2K?
Then who could forget Y2K? Unlike the above examples, the Millennium Bug was a spectacular group effort involving a swathe of global analysts, media, software and hardware heavyweights, and governments.
According to the widely accepted theory, all digital equipment would go haywire
when “99” became “00”, triggering a global computing meltdown. In 1998, BYTE magazine editor Edmund DeJesus stated that “Y2K is a crisis without precedent in human history”.
By then he was just one in a sea of frantic voices.
In the end, the calendar rollover proved a total fizzer – but only after $300 billion-plus had been spent globally on the problem.
Apple pie in the sky
Reports of Apple’s demise have been ever-so-slightly exaggerated over the years, too. In 1996 an unnamed Forrester analyst told The New York Times: “Whether they stand alone or are acquired, Apple as we know it is cooked.” Microsoft execs have been particularly off the mark when predicting the fate of their rival. In 1997 CTO Nathan Myhrvold said “Apple is already dead,” while in 2007 CEO Steve Ballmer commented: “There’s no chance that the iPhone is going to get any significant market share – no chance.”
And when it comes to the mobile phone sector, Ballmer is far from alone in getting things spectacularly wrong. A few years ago a venture capitalist named Vinod Khosla wrote a research piece on growth predictions from the major analyst firms Gartner, Forrester, McKinsey and Jupiter between 2000 and 2010. In 2002, these firms on average predicted 16 percent year-on-year growth in the mobile phone sector. By 2004 it had doubled in size. In 2006, sales they estimated would increase by just 12 per cent grew by 100 percent. In 2008 they collectively forecast 10 percent in sales growth when it doubled again.
Just let me check that number again
In 2009 Gartner predicted that Symbian would be the top operating system for mobile devices globally by 2012 and that Android would have just a 14.5 per cent of the global market. As things panned out, Symbian was gone at the end of 2012 after shipping only 2.2 million units in Q4, while Android has now overtaken iPhone OS and is the pre-eminent mobile OS in the world.
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