TechCrunch is running a story saying that Altimeter Group, the analyst firm founded by Charlene Li in 2008 after leaving Forrester, has been acquired for an undisclosed amount of cash or stock or whatever. It was undisclosed after all. The acquiring company, Prophet a consulting firm, is focused on marketing, design, and brand strategy.
Seems like Altimeter, as an analyst firm, was already into that kind of stuff using its research to advise customers and now, the two companies together will hopefully have more oomph. I wish them all well but have to wonder what the back story is.
An acquisition like this suggests to me that there’s a relative over supply of analyst firms out there. Perhaps we’re in an analyst bubble where the top few firms are garnering most of the opportunity. That would mirror the economy as a whole, more or less. But while the marketplace is still exploding with new ideas and product categories, there is less that’s net new and made from whole cloth and therefore the top firms have the ability to cover new wrinkles.
Cloud computing, SaaS, and before that hosting, were so different that they presented a break with the established data center paradigm and they legitimately required analysis from a different perspective. But today’s innovations seem more like line extensions, businesses are building on top of the cloud-front office-platform- social-mobile-analytic infrastructure rather than inventing new frameworks.
This has made it hard to be a scrappy mid-size analyst firm with staff, overhead, payroll, and rent issues to deal with. Medium and emerging businesses often try to get the attention of the largest analyst firms hoping a placement in an authoritative report will provide some measure of market clout. At the same time, end users are loath to pay for analyst advice preferring to read what the bigger firms put out as sponsored research thus leaving less work for the smaller analyst firms.
Solo practitioners without some of the overhead of the mid-size firms are able to make a living by being opportunistic but there are indications that the field is also crowded. To net it out, the deal for Altimeter is not surprising—other smaller analyst firms have taken the same path. It is more of an indication of where we are in a cycle and it may be a sign of things to come.
(Cross-posted @ Beagle Research Group)