The analyst market is currently in a constant state of flux with different firms struggling to find their niche. One size certainly does not fit all in this market which is why every time I see an acquisition I try and understand where this one fits.
Recently iSupply made their intentions known that they were going to buy Screen Digest. Ben Keen (the man in charge of SD in London) spoke to be on the phone yesterday and shared with me his diplomatic answers regarding how things were going to change…
1. Jonny: How will things change? Will there be a change in analyst headcount?
Ben: Business will continue. It will be business as usual with no changes in personnel. the combined analyst count of our two companies will now be 170 (120 of those from iSuppli and 50 from ourselves).
2. Jonny: Will Screen Digest be absorbed into the iSuppli Group and all act as one name?
Ben: No, Screen Digest will be an individual business unit with the iSuppli Group. There are no plans to change or drop our brand for the foreseeable future – we have a 40 year brand history and iSuppli have no plans to change the value that this brings.
3. Jonny: What are the advantages of this merger of skills?
Ben: iSuppli have bought other firms in the past who complemented their skills such as TRG who are leaders in informatics in automobile sector. Where both Screen Digest and iSuppli have dual coverage, we will not work in silos but instead have a very integrated team that makes most effective use of different talent and expertise.
4. Jonny: Where are the synergies?
Ben: Almost everything about this is completely complementary. Where we operate in similar sectors, it is at different but complementary ways. Screen Digest have a history of operating via a unique bottom-up granular approach. We focus on company by company, service by service, platform by platform, country by country. This adds a lot to areas that iSuppli have been tracking with very little duplication.
5. Jonny: What about client relationships – will existing clients now have relationships with both sets of analysts?
Ben: All client relationships stay the same but we do not operate the same business model that Gartner have (i.e. an ‘all you can eat’ approach). At Screen Digest people subscribe to specific product areas and buy services they want, access to the analysts that are important to them and and reports that are relevant. If they want more, they pay for the extra areas..
6. What are the geographic ramifications of this merger?
Ben: iSuppli has a strong analyst presence in North America and Asia, combined with our extensive European and US base, together we have a powerful global offering.
7. And what makes you different?
Ben: We are the analyst house with the best skill set combinations in TMT Coverage (technology, media, telecoms).
My take:
This is a smart move. Although the answers were not surprising I would be surprised if after a few years we still see multiple brands in existence and the name Screen Digest falls away.
The other thing to call out is the approach of buying by focus area which would necessitate a firm to buy multiple seats for one firm to cover their different focus areas. I am not saying this is a bad model as firms need to differentiate themselves – it is more a case of of wondering whether this approach can survive or whether market behaviour will force them to adapt.
My theory on analyst revenue models:
The diagram below is my take on the multiple revenue models of different firms. Whereas previously many companies positioned themselves firmly in the top left hand subscription model corner, the rise of ‘free research’ has forced firms to adapt their business model to stay ahead of the game. I predict that we will see more exclusivity and less convergence to one sector as the next few years progress.
