Expert analysis . . . but who's paying?
You're a software start-up with a catchy name, a few hundred thousand dollars in seed money and a handful of talented
engineers.
But your software is more of a gleam in the chief technology officer's eye than an actual product. Consequently, you have no real customers, and the venture capitalists are asking hard questions about the size of your targeted market.
So how do you convince potential customers and cynical trade journalists you're not a vaporware vendor? And how do you persuade prospective investors that the technology you're developing will open up a multibillion-dollar market?
Simple. You try to get an expert to agree with your vision. And the "experts" in the network and high-
tech world are the analysts.
Through commissioned "white papers" extolling the technological superiority of a client's product, publication of research reports forecasting explosive new markets, or provocative quotes in the trade press, high-tech analysts play a critical role in the high-tech cycle of hype.
Analysts typically serve either end users or vendors. The good vendor-oriented analysts - and there are plenty of them - will pull no punches if they think your company's product is a loser or the target market doomed. If your product is promising but flawed, a quality analyst will tell you how to plug any holes.
But the bad ones - and there also are plenty of those - are, well, more flexible.
"An awful lot of analyst groups have a reputation for writing whatever it is they're asked to write," says Anne Thomas, a senior analyst at the Boston-based Patricia Seybold Group, which sells its services to vendors.
Such written-to-order white papers "are opinions bought and paid for," says John Rymer, president of Upstream Consulting, in Emeryville,
Calif.
Rymer says even the most objective analysts must resist heavy-handed "direction" from paying clients that want their products cast in the most favorable light.
"Your integrity is constantly under attack from vendor clients who pressure you to change the conclusions of your research if they don't like them," he says.
"They always want me to write their particular marketing slant," Thomas says. "If we don't like a product, even though the company's paying for it, we're not going to say, 'Hey, this is great stuff.' "
Still, Thomas says, "You sort of gloss over some of the bad points when you're writing for them, and you highlight their good points."
User-oriented analysts make a lot of money selling research reports on various technology markets to IT organizations. Unfortunately, many such reports are informed less by sober analysis and more by feel-good prognostications designed to attract buyers.
"Writing a research report that says 'the market opportunity for ATM in the LAN is negligible' is a nonstarter as far as sales are concerned," says Thomas Nolle, president of CIMI, a technology assessment firm in Voorhees, N.J. "So the tendency is to write research reports which postulate within the next three years a relatively large market."
Extravagant market projections are designed for another important audience: the trade press.
"The media finds the big numbers more palatable and more interesting," Nolle says. "It used to be only a $1 billion market was enough. Now it has to be a $5 billion market."
The bottom line for end users
is often a grossly distorted view
of reality.
"We in the analyst community can cloak this stuff in an air of respectability," Nolle says. "By validating mysticism, we create a market of myths."
- Chris Nerney
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