At the time, Outsell analyst Louise Garnett noted that Gartner’s December acquisition of META Group was a "consolidation" play, not a synergistic acquisition such as the Forrester/Giga deal. As we expected, there have been major adjustments to the META business upon integration into the Gartner organization. META will no longer operate under the META name, and thus there is no transition of branding – not a big surprise since the Gartner brand is much more prominent.
In the recent earnings call, we found it interesting that Gartner spoke of the parts of META it decided to "keep" rather than what it decided to let go of. A summary:
What Gartner kept from META
META employees retained:
- 90 sales folks now all trained on Gartner products
- 60 analysts (60% of analysts retained)
- 45 consultants
According to the META 10K, as of December 31, 2004, the company employed 631 people. The numbers listed above equal just 195. We suspect some employees are still left that aren't included in those numbers, but it is certain that a lot of people are no longer with META. Gartner has closed 23 of the 39 redundant facilities and plans to close 32 by year-end.
Examples of businesses retained on the service side
- Insurance, Government, Energy/Utilities. These are services where we know META was strong.
- Enterprise Architecture. This is the only horizontal service explicitly stated as having been kept.
- UK and Germany. Operations were kept in these countries.
Examples of businesses retained on the consulting side
- The two key consulting products retained were the price benchmark and the IT process engineering product.
Revenue and pricing
- Gartner has a dedicated team to carry out META renewals, which is a high priority and is on track. META 2005 renewals are expected at 55 percent or better in terms of revenue compared to 2004.
- Gartner expects META 2005 consulting sales to contribute $20-$25 million; last year META consulting revenue was about $45 million.
- Gartner claims no list-price increases across the board, even though the industry has been indicating it has seen price increases from Gartner. Gartner claims to be more efficient in "sales"; we interpret that to mean it is doing less "discounting" rather than imposing standard across-the-board list-price increases. Consulting rates continue at just above $300 per hour.
The big surprise
The big surprise was the announcement that META co-founder Dale Kutnick joined Gartner as a Senior VP. Gartner was not what Outsell would call Kutnick’s favorite company, in light of the competitive nature between the two firms and the fact that Kutnick left Gartner in the first place to start META. We suspect he’s just in the game until the transition is complete, and then he’ll either move on or move into some sort of emeritus role.
What happened to META? META is gone for all intents and purposes. It has been absorbed into Gartner, and a lot of the META employees and products are no longer around. The IT research industry players have been jockeying to pick up clients who are still looking for a second opinion, a role that META played vis-a-vis Gartner. Forrester, IDC, The Burton Group, and The Advisory Council have all launched sales and marketing programs to garner some of the fallout. The next year should see an increase in sales for other IT research firms as former META customers search for that second opinion.