AR Classics: What the arrival of HFS Research tells us about freemium

In September 2014 Phil Fersht at HfS Research published some charts which showed its lead position as the firm had increased the most in influence over the preceding year. That’s all the more notable an accomplishment because it’s the second year they have had that position [in the Analyst Value Survey, which in 2014 was sponsored by Kea Company]. Other firms participants said had increased in influence included Gartner, 451 Group, Forrester, Digital Clarity Group and NelsonHall.

In a comment on their post I said:

“As the researcher who led this survey, I do wonder what else the results mean. I think it’s quite appropriate to see the results of this questions as an impressive accomplishment for any firm, but especially for HfS Research which has won a reach far greater than its modest size should allow. That said, I also wonder if this doesn’t also show a degree of under-innovation in the rest of the analyst industry. There’s really only Gartner that seem to have hunger to really grow very fast.

I should also note two other things about the survey. First, this wasn’t the only question. HfS came top on this question but not on all the others. There isn’t one clear “winner” from the survey. Second, the survey isn’t a survey only of buyers but of users generally (some of whom buyers, others influence buying, and some don’t influence buying at all).”

Turning this over in my mind I have three further thoughts.

  1. First, I think these results matter. It would be easy to say that it’s not a surprise that a small firm would be one that’s growing faster but, in fact, it is. For example, looking back at the results from ten years ago, I can see the firms then said to have risen the most in influence were: Forrester Research; Gartner; Aberdeen Group; Burton Group; IDC; and AMR Research. None of those were small firms. A few years later, the risers were Gartner; Forrester Research; Current Analysis; Ovum; AMR Research; and Canalys. Again, none of them were small firms. HfS Research’s shareholders will probably be happy to see that many of those firms ended up being acquired: Burton, AMR and most recently Current Analysis.
  2. Second, these results are not [measurably] swayed in HfS’s favour by the fact that it encouraged people to take part in the survey. We’re able to track click-throughs into the survey and can compare the results from different sources. It would not, as far as I can see, have been an unreasonable concern. In fact, the main impact of additional survey participants who responded to HfS’s encouragement was that it pushed up the profile of its competitors. That is not where the leadership position comes from.
  3. Third, there’s another way in which HfS Research stands out, and that is in the ratio of subscribers to users. It seems to me that HfS is a prime example of how to use what we have called since 2011 freemium strategies. Our survey shows that for every Gartner subscriber, there is a non-subscriber using Gartner (less intensively, of course). For HfS, however, the ratio is much, much higher. There’s much more value in the free content that HfS offers (just compare, for example, the summaries of these research items mentioning Xerox from Gartner and HfS). HfS gives away as much as it can in the summary; Gartner wants to give away as little as possible. That difference, I believe, is part of what is giving HfS the edge it has.

Of course, research summaries are not the only, or even the main way, in which HfS and other freemium firms are giving away insight. But we’re now in the position where a freemium business with a small cloud infrastructure can get on the radar. Of course, we cannot imagine that all [or even most] of HfS’s readers will turn into subscribers or consulting clients. But what we can see is that other firms intelligently using freemium, and here I am especially thinking of Pierre Audoin Consultants (which has performed strongly in 2014 [and is now teknowlogy]), are able to dramatically accelerate their go to market capacities.

If you’d like to find out more about the dynamics in the analyst industry today, find out more about the Analyst Value Survey.

[As one of the most-read articles of all time on this blog, we have added it to the ‘AR Classics series. Clarifications in square brackets have been added later.]

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