Friday, 23 February 2007

IDC goes far and wide... but not to users?

IDC publised a press release on their web site and Tekrati detailing their results for the first time: as they are a subsidiary of IDG, which is privately owned. So far they've shyed away from disclosing financials. This behaviour change might indicate that IDG may be considering putting up a IDC on the market?

Here are the numbers anyway for CY06: $297 million, 12% increase over 2005. That's $109k per analyst (the claim to have 900). For Gartner (IT), this ratio amounts to a staggering $745k/analyst.

IDC does not break down their events and consulting business, although they mention it as an "important area of growth", claiming to reach 45,000 technology buyers and IT executives (we would love to know the breakdown).

They plan to extend their geographical and industry coverage -they have a much better geographical coverage than Gartner Dataquest and they seem pretty successful with their Industry Insights programme -they have invested $40m to further boost it.

What their press release doesn't mention though is their consulting business. The word on the street is that they're not really aggressive. The IDC brand is quite strong with users and IDC would gain technology buyer insight and influence worth every penny for vendors...

16 comments:

French said...

Good point on consulting. Most of the public corporations do break out research, events and consulting into separate buckets, pretty much for the obvious financial analysis reasons.

One nit: This is not the first time IDC has released a year-end performance wrap-up. "For calendar year 2005, IDC's worldwide revenues were $266 million, representing a 14% increase over the previous year", from IDC reports strong growth and expansion in 2005.

Anonymous said...

IDC's constulting was $75m - all from IT vendors. In addition their "Go-Market-Services" were not broken out, which are their pay-for-play whitepapers (packaged as "Executive Briefs"). If you analyze $ per paying customer it is 95% (or even more) from an IT marketing exec. IDC is not at analyst firm, it is a business that sells branded data, and a white paper shop. Kudos to them for continuitng to grow with this business model, but also very sad when you look at how superior Gartner has become over the years (they are $1bn in revs, has the industry's superlative IT user business and has been around many many years less than IDC). IDC's leadership always looks enviously at their esteemed competitor, and knows the reason for their inferiority is a result of selling out to suppliers and poor investment in quality research.

Anonymous said...

if i divide 300 mio by 900 analysts - it is around 330k but that is just math. if you compare the 300 mio to the gartner it-vendor business that's not that bad. and at least idc is not changing constantly its strategy concerning it-vendor business as gartner did the last couple of years. but you are right thoughtleadership is not the usp of idc

Anonymous said...

IDC has continued to bleed every penny it can from IT vendors these past few years and continues to demonstrate modest growth solely as a result of its competitors' declining or being acquired (Meta, Giga, Ovum, Aberdeen etc). It has made a largely unsuccessful foray into the user business with its "Insights" business (financial insights has done OK, but the rest have pretty much tanked), leaving McGovern with the motivation to explore cashing in on his research firm while he can still make some nice coin, whether he finally manages to IPO it, or finds a buyer (Gartner may decide to take it out of the market and finally take a monopolistic position while it is enjoying strong margins). Bottom-line, the IT research business is unlikely to continue to grow in this commodotizing market and firms like IDC will find it increasigly challenging to maintain their revenue performance and are more likley to look at methods to increase profitability in the future - for example outsourcing more of its data collection processes to low cost countries like India and Eastern Europe. IDG has had more success developing user-based services with it's publication brands outside of IDC (for example, CIO magazine's "CXO Executive Countcil"). McGovern needs to decide whether IDC still represents a strategic asset for the IDG group.

Anonymous said...

In looking at this information I want to raise a point that IDC and Gartner's business models are different. Gartner, given its consulting background is heavily dependent on consulting which generally draws more $$$ per person than a market research firm like IDC. IDC as the name says, makes it money from collating and publishing DATA from the IT market. It has done well there and has given McGovern good returns. While Gartner may be larger than IDC and have more dollars per consultant, its margins are pretty bad (~1% in 2004, loss in 2005, ~5% in 2006). And its margins improved in 2006 largely due to more research sales versus consulting sales. Gartner and IDC should compare notes and consult each other to help their business. Gartner is increasing its research product mix so that it gets better margins whereas IDC is trying the reverse to increase its consulting product mix to expand its sales. Both players are well entrenched in their space and the question is whether they can defend it and grow it.

Dave said...

I worked at IDC for 16 years and left nearly a decade ago. When I started, in the early 1980's, the company had low double digit revenue and was bleeding red. To see this company grow 10X+ to nearly $300M with what is likely $20-$30M in operating profits is pretty impressive.

Only one company in the business is larger. IDC is arguably #2 in the business or #3 behind Forrester and has held that position for a long time.

Dataquest, InfoCorp, Giga, Meta, etc. are all gone while IDC remains growing and profitable.

I know many people who would be proud to own such a business. Well done IDC for keeping close to your customers and providing a growth path for your valued employees.

Anonymous said...

When you look at IDC's leadership it is a very unimpressive collection of individuals with limited flair or thought-leadership. All the quality talent over the last decade has left, there are no respected industry heavy weights left (Ganz and Gens are well past their expiry-date) and their only avenue for growth remains in their data services. There is little doubt they lead the market with their coverage of hardware and printers, but have completely faded away in the realms of services and many of the software areas. The secret of their financial success is they have been so slow to react to new trends or market changes, that they inadvertantly created a monoploy in the commodity areas.

Dave - you are correct that they have done remarkably well financially, but as an innovative research house they face tough times ahead as the traditional IT markets level out.

Anonymous said...

I agree with the last post: IDC's quality as a "researcher" has significantly declined over the last few years to the point that they are just a data-cruncher these days. Clearly a smart move from their standpoint to yield more dollars, but their days as an "analyst" entity seem numbered. Most IT vendors I talk to today prefer to use analysts from other firms who have more credibility and experience, but stick to IDC for market size and share data.

John said...

I went to "Directions" this week... Gantz was out of touch and the rest of the presentations were really tired (Gens was still living in the '80s). IDC is dead... I was there for ten years, the rot has set in... trust me

Anonymous said...

I liked this: "When you look at IDC's leadership it is a very unimpressive collection of individuals with limited flair or thought-leadership.".

Would you rather have Gene Hall, who is just as dull - and disinterested in the contents of the research? Or George Colony, who pretends to be a thought leader but gets it painfully wrong?

Anonymous said...

At least Hall and Colony have some kind of industry perspective. The IDC guy (Campbell) is just a bean counter - and noone even knows who he is...

Anonymous said...

IDC and Gartner are just plain BAD for the research business these days. The quality is poor, the research tired. They need to go away and be replaced by research people want to see and not this pay-for-play marketing garbage. Noone buys IDC or Gartner for their "insight" anymore. AR people like them because they give them job-justification, but they are just not what they used to be. Please GO AWAY before this industry is officially dead.

Anonymous said...

OK folks, here is the rub, this company has been an utter charade since 2000. For example, in the services group, back in 2000, the GVP was having an elicit relationship with an IDC analyst and everyone - including 'Kirky' - I wanna be a Dentist (derived from the cartoon in the "Rudolph the Red Nosed Reindeer" cartoon") knew, yet NOBODY called him on it, EVER. Shortly thereafter, September 11th 'happenened' and IDC's resident leader "Traci" decided it was kosher to terminate analysts (despite the fact that good people were being incinerated in buildings in NYC) rather than table the action for another day.

This is just the surface gang. Since that day, nearly 6 years later, the nonsense has continued (both in the groups and companywide). And the people that have commented, have been spot on. Frankie "Choppers" Gens is a Chandler Bing wanna bee, and Johnny Gantz is a blast from the past. What makes it all critical and ultimately terminal, is that the company has rigged the system against its own. Specifically, the company has created compensation plans that ultimately set anlalysts and sales (excluding Jimmy "Tweed Blazer" Farley) up to fail.

This company is on the edge of implosion. The best thing that Patty Mac, Kirk, and Markie Sullivan can pray for is a buyout.

Anonymous said...

Not sure why this rant is relevant,but I'd be more impressed if you used proper vocabulary. Here is a tip:

elicit: to draw or bring out or forth; educe; evoke

illicit: disapproved of or not permitted for moral or ethical reasons.

One is a verb ( elicit)the other is an adjective ( illicit)

Just a tip.

Anonymous said...

The fact that Gartner then proceeded to hire the GVP with the illicit tendencies kind of sums up their moral values too.

Wonder if they let him go on his tours of the Asian offices also?

Anonymous said...

The rant is relevant, despite the author's inability to distinguish between verb and adjective, because, if true, it proves the point that all that matters to Kirk and co is revenue. Based on how this story has been told to us Non-IDC analysts at other firms, when the services group started bleeding red, the SVP was finally called on for his affair, but not a minute before. It seems as long as money was being made, it didn't matter that the SVP was subjective and that his business decisions were affected by his personal decisions, so much so that there was speculation that Traci (I think that was her name) and her groupies were subtly using the fact of the affair to make Mikey shut up and ensure they got what they wanted. As soon as the group was no longer profitable, THEN the affair became an issue and THEN action was taken.

What this speaks to is the points made earlier about IDC and their business direction. It seems to me that ex-IDCers are always conveying to the rest of us when they join our firms that insightfulness, quality and even humanity are pushed by the way side in favor of revenue at all costs. But all this is truly an aside - the main point of this blog was to highlight how IDC's model is not sustainable and that is really the only thing that should be discussed here!