Tuesday, 13 June 2006

Reviewing Gartner Top Predictions – Who will step up?

One of the common comments about Gartner is the poor quality of the analyst work. However, it is rare that anybody actually does the work of analyzing any Gartner research. So, dear readers of ARmadgeddon, do you want to do commentary on Gartner’s predictions?

To provide an example, please see the “Comments” for an analysis of a Gartner prediction “In 2005, AT&T will be acquired by BellSouth and MCI will be acquired by SBC” which proved to be completely wrong in a very short amount of time.

If you think this is waste of time, please say so.

1 comment:

ARonaut said...

Below is a prediction(1) from Gartner Research Note G00124887 “Our Top Predictions for 2005, and Beyond” which is part of the annual Predictions series that got it big time wrong on telecomm acquisitions. A number of interesting points about this prediction:

Qwest was never even mentioned, but ended up as a major competitor to buy MCI
Verizon was dismissed as a potential buyer of AT&T or MCI
BellSouth never made a public play for AT&T or MCI
It was SBC that bought AT&T, not BellSouth
It was Verizon that bought MCI, not SBC
This prediction was wrong within only a couple of months
Research note published on November 17, 2004
SBC announced purchase of AT&T on January 31, 2005
Verizon announced purchase of MCI on February 14, 2005

Of course, this year we also saw SBC swallow up BellSouth, which was also not anticipated by the Gartner “Top Prediction.”

What does the analyst being so wrong mean for clients relying on the recommendations of the analysts?

(1) I am not violating Gartner's copyright by including this extract from a Research Note. When the Research Note was published it was freely available to non-clients for several months as part of Gartner's marketing efforts. The larger firms (e.g., IDC, Forrester, and Gartner) usually put out a series of "Predictions" papers every year in November or December and post them free of charge for several months.

Prediction: In 2005, AT&T will be acquired by BellSouth and MCI will be acquired by SBC.

A number of forces are coming together to make this prediction possible, and then improve the likelihood that it will occur.

Regional Bell operating companies (RBOCs) such as BellSouth, Verizon and SBC no longer have regulatory restrictions concerning what network services they can offer. In the past, they were unable to acquire interexchange carriers, such as AT&T, MCI and Sprint. The RBOCs wish to be leading fullservice providers.

RBOCs have the financial strength to conduct mergers of this size. AT&T is more likely to be acquired by BellSouth due to past relationships and negotiations. The direction and financial situation of Verizon — and the apparent lack of interest of its key executives — make it less likely that Verizon (compared to Bell South or SBC) will make a major acquisition. Therefore, MCI is more likely to be acquired by SBC. AT&T and MCI are No. 1 and No. 2 in market share in long-distance services to the Fortune 1000, respectively, but their long-distance revenue has been declining more than 10 percent per year, primarily due to RBOC inroads in consumer long-distance voice. AT&T and MCI are financially constrained to grow or acquire new businesses to offset the revenue declines. Although the RBOCs would rather wait for such mergers, other companies' interest in MCI and AT&T will compel them to move quickly rather than later.