Gartner's 'Magic Quadrant' set for court dismissal

By Alex Handy

October 21, 2009 —

Back in May, an e-mail and Lotus Notes archiving company in San Jose filed a complaint against consulting and research firm Gartner Inc. The complaint, filed by ZL Technologies, alleged that Gartner was spreading libelous reports that failed to position ZL Technologies in the “Magic Quadrant” of its famous industry charts.

This complaint, as well as others from ZL that accuse Gartner of selling misinformation, is up for dismissal tomorrow. Gartner's lawyers have filed for dismissal on First Amendment grounds.

The original libel complaint sums up the dispute, from ZL's perspective. “Since 2005, Gartner has placed the ZL in the bottom portions of the lower left-hand quadrant in the MQ Reports, as Niche Player (the 'MQ Placements'). These MQ Placements were, and are, derogatory because they are understood by technology purchasers as a warning, by Gartner, that ZL and the ZL Products are not good choices for enterprise e-mail archive applications,” reads the complaint.

In a response to questions about the legal action, Andrew Spender, vice president of corporate communications at Gartner, issued a statement to SD Times.

“We are aware of the complaint filed in California by ZL Technologies regarding their location in a Gartner Magic Quadrant," read the statement. "While it’s not our practice to discuss pending litigation, we do consider this complaint to be completely without merit and have moved to dismiss it in the courts. While we regret that ZL Technology [sic] is dissatisfied with its location in the Magic Quadrant, we remain committed to providing our clients with independent research and advice about the products that we cover."

A fine line
James Governor, analyst with RedMonk, said that being in Gartner's Magic Quadrant can move mountains for a company.

“The Magic Quadrant is incredibly powerful and is a huge deal," he said. "It's the difference between trying to sell something and trying to fulfill. The business of IT purchasing is predicated on requests for proposals. Everybody in the leaders [quadrant] is always going to be invited to bed."

Kon Leong, president and CEO of ZL Technologies, said that this lawsuit is about bringing transparency to a company that has become all-powerful in IT spending decisions.

“The market power of Gartner is so overwhelming, especially for large purchases, that they are like IBM in the old days, when we'd say, 'You can't get fired for choosing IBM.' That's great to have that kind of power, but with that kind of power comes responsibility,” he said.

Leong's company was a Gartner client on Aug. 20, when he claims Gartner terminated its contract with ZL Technologies. Leong is confident that Gartner will reimburse his company for the outstanding services it will now not provide to ZL Technologies.

There are multiple issues Leong has with Gartner's practices, but most of them relate to a lack of transparency within Gartner's ratings methods.

“It would be nice to know, of the vendors rated, how much money did they spend on Gartner? That factor is very similar to what the SEC enforced on Wall Street ratings agencies," he said. "This way the reader can say, 'I can factor that into my assessment.'

"The other transparency issue is with regard to the scores. If you go and describe 14 different parameters on which you score a company, then you neglect to show the scores, that entire exercise becomes meaningless."

Leong said that Gartner's evaluations of his company's products were based on customer interviews, and that he knows his customers were happy. In fact, he said, “The Gartner analyst even says, 'You have particularly happy customers.'

“The issues are much, much larger than just ZL and our complaints. I think it has to do with fundamentally resetting the competitive landscape to ensure competition."

Governor said that this is all just a part of being an analyst. “Really what is the analyst business? It is, in many respects, about the management of conflict of interest. Traditional analyst firms are focused on an IT purchase.”

On Oct. 23, a judge heard the motion for dismissal from Gartner, but made no ruling by the end of the day. The motion will be heard again on Monday, Oct. 26.

Related Search Term(s): Gartner

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Comments

10/22/2009 06:18:15 PM EST

I am not a fan of Gartner, but no one could have been DUMBER than ZL. When gartner made the report they had collected inputs from all other vendors. So clearly the visibility that Gartner had was not the same visibility that ZL had. Maybe ZL cannot cope up with the current economic stress. Shouldn't ZL be focusing on webinars, seminars, go-to-meetings, expos and other sales and marketing things that help it get more business? More than a decade back 3Com was bigger than Cisco. Cisco worked on their marketing machinery to move ahead of 3Com. They did not become cry little babies like ZL. Well every CIO knows that ZL does not have the post sales support they need.

United StatesJudy Sheets

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