Gartner buys AMR Research for $64 million

Posted: December 2, 2009 in Economics, Technology
Tags: ,

I have been an analyst for ten years and during that time I have witnessed economic rises and falls.  As the economy goes so goes the software industry analyst world.  Yesterday Gartner announced that it was buying AMR Research for $64 million — a nice payday for the founders, I guess, and a reminder that the economy is fragile.

The last recession saw several analyst firms run out of gas.  I was working at Aberdeen Group in the early part of this decade when the owners and the venture capitalists tried to decide if it was worthwhile to keep the lights on.  The ultimate decision was maybe.  The VC’s bought out the founders and sent them packing while they brought in a new CEO with a new direction.

The new guy was not so much successful as he was timely.  He had the good fortune of running the ship during the beginning of the recession’s recovery phase.  Even so, the VC’s had limited patience and limited cash and as soon as they could Aberdeen was sold off.

At $40 million in projected revenues, AMR is a small company when you compare it with Gartner’s billion dollar plus revenues.  But AMR and other smaller analyst firms provide a valuable service simply by having an independent voice that I don’t think Gartner can match.  As a public company Gartner must be all about volume.  They need to sell many subscriptions to the same research and entice many people to their conferences to make money.

But the analyst business is not about volume; it’s about one on one, roll up your sleeves and consult with a customer about that customer’s unique business needs and position in a market.  Not to denigrate Gartner, they have good people doing good things.  However, the business model of publishing analysis in volume seems outdated.

Ten years ago most analyst firms tried to sell subscriptions and several were successful but when the economic tide went out many customers decided they could do without the mass produced information and they haven’t come back.  Individual analysts became stars in lieu of firms.  Paul Greenberg, Brent Leary, Jeff Kaplan, myself and a host of emerging boutique analyst firms with a small hand full of people are all making a living in markets where subscription services once ruled.

We often publish our insights free in the blogosphere and if you need more than that you can call us.  That’s the ailment afflicting the analyst world and the big subscription model today.  Customers don’t want to pay for insights and they don’t have to.

So when I look at the Gartner-AMR deal I see an old and increasingly out of date business model but what I don’t see is the company or the industry becoming more stable or secure.  Less competition means fewer voices and fewer ideas, a mono-culture precariously positioned to address the markets in an era of great change.

So, what did you think?

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