Focus on market share and sharemarket misguided

Analysts need to look at other things, says Tom Yager

There was, and still is, no such thing as an IT impulse buy, a system purchase or a switch in suppliers driven by the emergence of a new or updated CPU architecture. Indeed, institutional buyers are still unmoved by that great obsession of punditry, market share. It delights me whenever tech industry odds-makers’ projections, always presented with such certainty, are made hollow by the market that these pundits fancy themselves driving rather than watching.

Something I’ve found most delicious is proprietary RISC Unix servers’ failure to hew to analysts’ actuarials and AMD’s success despite prophecies of inescapable doom. In seeming frustration with this, analysts have taken to issuing long-range market projections based on the debut of new technology, despite the fact that a few months or a year later, a competing vendor is certain to reach or surpass that laudable milestone. The market isn’t moved to make strategic decisions based on snapshot-driven analysis.

What tech analysts seek to influence these days is not the IT market, but the stock market. Those strings are far easier to pull, and “told you so” trophies are dealt out when an analysts’ remarks on a new technology cause a chipmaker’s stock value to take a dive. Through this mechanism, analysts’ prophecies fulfil themselves. A loss in share value reduces a manufacturer’s access to capital and can force snap strategic decisions that aren’t aligned with the company’s roadmap, but which might calm shareholders who are rushing to dump their stock.

In this way, technology analysts stymie innovation and slow the pace of new technology. What they lack is the power to move technology buyers, to affect the decisions they make in your investments. Sun isn’t folding up its tent on SPARC because it doesn’t stand a chance against POWER and x86 any more than it’s planting and reading over Solaris because of the looming threat of Linux. Sun doesn’t make strategic decisions based on analysts’ manipulation of short-term stock market investors, and that’s one of the reasons that I hold the company in such high regard.

That’s not to say that Sun doesn’t go on the offensive when it foresees remarks like the ones I parodied earlier in this column. Immediately following IBM’s announcement of its new POWER6 CPU I got a call from Sun offering me a chat with a spokesperson for comment. I politely declined when I learned that the spokesperson assigned to me was of low rank, meaning that I’d get the canned response being dealt out to the media at large. My phone rang within half an hour with a call from Tom Atwood, the group manager of Sun’s Systems Business Unit. Suffice to say, Atwood set out to dissuade me from a dire reflexive analysis, and as soon as he discovered I was far more interested in technology than in driving down Sun’s stock price, he relaxed.

Our discussion was revealing, enlightening and enjoyable, but I have no doubt that minutes after talking with me, Sun’s PR dialled him into a call with an analyst or journalist who put him on the defensive, probing for the one-liner that would portray Atwood as the apologist du jour for the doomed SPARC.

That shouldn’t happen, but I’m heartened that I reach thousands of readers who would rather have the conversation that I had with Atwood, or sit next to me at AMD’s CTO Summit, than read some analysts’ answer to “What impact do you think POWER6 is going to have on the market?” with a knowing wink that the “market” in question is a stock exchange. I know when you come here to read, you realise the market, and all of the investments you make are long-term.

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Tags technologymarket shareanalysts

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