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ZL lawsuit against Gartner dismissed, but Magic Quadrant debate continues

ZL Technologies Inc. sent out a notice today that its lawsuit against analyst firm Gartner has been dismissed.

In a statement, CEO Kon Leong said:

ZL believes that Gartner’s overwhelming influence on large corporations’ purchasing decisions, and its inaccurate ratings, including its bias in favor of large vendors, combine to pose major competitive hurdles that hurt smaller innovative vendors across all technology sectors. The harm falls not only on new and innovative companies like ZL, but on the enterprise customers who receive faulty purchasing advice, and as a result overspend on inferior technology.

While we are disappointed that the court has dismissed our lawsuit as filed, we are pleased that it has given us leave to amend our complaint, over Gartner opposition. We believe the market should take note that the defense on which Gartner prevailed was its argument that its reports contain “pure opinions,” namely, opinions which are not based on objective facts. In ZL’s view, that is directly contrary to the statements Gartner makes to its customers when selling its allegedly sound research. ZL intends to amend its complaint and refile within 30 days.

Whatever happens from here legally speaking, the lawsuit itself raises interesting points about analysts, purchasing decisions and ethics. Whether Gartner is protected by the First Amendment as speech or not won’t protect it from criticism such as StorageMojo blogger Robin Harris’s recent post, “Gartner’s Magic Hydrant.”

The Magic Quadrant has the analytical rigor of a beauty contest. Implicit and explicit assumptions about customers, markets, technologies, use cases and suppliers obscures more than it reveals. The MQ seeks to rank vendors not only by what their products do, but by what Gartner presumes an enterprise customer should want. They presume too much.


Customers aren’t idiots; they can see that a company isn’t very big. What they don’t know is how well their products work.

Gartner needs to start earning that $1.3 billion, not just collecting it. If the FTC can require lowly bloggers to report vendor freebies and payments, perhaps the day isn’t far off when mighty IT consulting shops will have to do likewise. Kudos to ZLT for noting the emperor’s scanty attire.

Few in the blogosphere or storage Twitterland have stepped forward to vigorously defend the Magic Quadrant, while those who base buying decisions on the Magic Quadrant also come in for criticism.

A sampling of that debate from Harris’s blog–

From a commenter calling himself “Thomas”
Between paying Gartner to think for them and vendors to do the infrastructure, it’s no wonder business execs want to adopt technologies that get rid of no-content vendor pass-throughs that walk the halls calling themselves “IT staff.” Filling out purchase orders and plugging in ethernet cables do not provide competitive advantages and if you cant get a competitive advantage from your IT, then why not outsource it?

From a commenter with the handle “jh”
Gartner is a tool to be used by knowledgeable professionals to help them understand the market, narrow focus and choose product. Nobody buys right off a list. Although you and others may not like the 2 x 2 chart, it provides a good shorthand of the overall market in ways that are easier to talk about than a stack of thousands of pages of product information. If a IT pro or a CIO is just looking for a defensible position, they could spend a lot more money getting a lot less value by hiring some of the consulting organizations I have dealt with…

When I informally polled my Twitter followers about this when the lawsuit was first announced, I also got some varying replies.




Navel-gazing like this about the role of industry analysts in the storage business has popped up before, but to little noticeable effect on how anybody — vendors, users, and analysts — seem to operate. I’m not sure this time will be any different, but the lawsuit may have raised the profile of the debate a bit.

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