Legal dispute sheds light on how Gartner's "Magic Quadrant" is made up

Legal dispute sheds light on how Gartner's "Magic Quadrant" is made up

Summary: The legal battle between ZL Technologies and Gartner over the "Magic Quadrant" reveals some interesting facts about how it is made...

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Dave Kellogg, the CEO of Mark Logic took some time to wade through about 100 pages of legal documents around the dispute between ZL Technologies and Gartner Group and its "Magic Quadrant." [Dennis Howelett: Gartner in the dock over Magic Quadrant | Irregular Enterprise | ZDNet.com]

Dave Kellogg writes:

I remember a long time ago CA boycotted all Gartner research after some research-related dispute. It certain did nothing to help them: picking a fight with the movie critics always seems a risky strategy for a producer.

But it is hard to argue that Magic Quadrants are good for competition.

. . . Since I think it’s fun to read court filings (when I have the time), let’s dig down a little deeper.

Mr Kellogg finds that:

One of the many arguments made in the complaint is that Gartner doesn’t do “a single minute of independent testing of the products it purports to evaluate.”

Gartner's response is a motion for dismissal:

Whether plaintiff’s opinions about its product are correct, comprehensible or sincere has no legal significance; what matters is that the Complaint fails to state a claim because it attacks opinions expressed by Gartner, Inc. These opinions are constitutionally protected, in part to discourage lawsuits like this one, which are aimed at chilling the free expression of ideas and opinions.

ZL's lawyers oppose the motion for dismissal:

... what Gartner says not to buy languishes unsold, leaving its developers scrambling for the leftover market share Gartner does not dictate. The problem arises when Gartner exercises its market power recklessly, maliciously or—because of its tremendous influence—negligently. When that occurs, as it has here, innovation and competition are stifled, to the detriment of small companies who lack the resources to challenge Gartner, and to the consuming public at large.

Mr Kellogg pulls this quote out from Gartner's counter-argument:

... the real point of contention here is not the quality of ZL’s product, but instead the subjective analytical model Gartner used to assess ZL’s market position and prospects. ZL does not contest Gartner’s basic assessments of ZL—that it has a good product but needs to expand its sales and marketing—but ZL challenges its placement on the Magic Quadrant Report because Gartner uses a “misguided analytical model” that gives “undue weight to sales and marketing.”

This is interesting because I had no idea that sales and marketing were so important in judging the viability of an enterprise IT product. It would seem that this would automatically give a large company a good start in the "Magic Quadrant" positioning regardless of the quality of the product.

This means that the "Magic Quadrant" is stacked against startups without the means to have a large sales and marketing department. That can't be good for innovation. But is it illegal? Probably not, but as the British say, "it's not cricket" meaning it's not fair.

Please read Mr Kellogg's full analysis here: Gartner Sued Over Magic Quadrant for Alleged Damages of $132M plus Punitives of $1.3B

Topics: Enterprise Software, CXO, IT Priorities

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2 comments
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  • When it comes to business law, not fair

    Is oftentimes illegal.
    Lerianis10
  • Keep shining that light on Gartner

    It's good for Gartner to be exposed by cases such as this. Too many people take Gartner's opinion as the end-all for technology evaluation, and especially the higher you go up the corporate ladder.

    This isn't to say Gartner's methods are completely off base, but they need to be weighted properly and understood when companies use the Magic Quadrant evals to choose products to evaluate for themselves.

    Yes, the quality of a product is important, but the ability to market and sell is important as well (see Microsoft vs. Novell). You can run the superior product and reap some benefits from it, but you'll also suffer from the lack of marketshare when looking at the ancillary items that surround a technology choice.

    Once people really understand what Gartner is putting out there, then their influence won't be so great.
    ejhonda