Claiming bogus ranking, Westford firm sues research giant Gartner
Courtesy of NetScout Systems
NetScout Systems, headquartered in this building on Littleton Road in Westford, has filed a lawsuit against research giant Gartner Inc. in Connecticut Superior Court.
How much can an industry report impact a business? Westford-based NetScout Systems Inc. isn’t taking chances, and has sued Stamford, Conn.-based research giant Gartner Inc., saying a report published in March unfairly classified the network quality assurance firm in a way that could harm its reputation.
At issue is a Gartner Magic Quadrant report that places technology providers into one of four categories based on market research, providing a “wide angle view of the relative positions of the market’s competitors,” according to a summary on Gartner’s website.
The quadrant “quickly helps you digest how well technology providers are executing against their stated vision,” according to Gartner.
NetScout dubbed a “challenger”; cautions issued
A company may be placed in a quadrant titled “leaders,” “challengers,” niche players,” and “visionaries,” with leaders enjoying the highest level of prestige. And they execute well on current goals and are well positioned for the future, according to Gartner.
NetScout, which, according to IT research firm IDC, is the top vendor in the network management software and appliance market, was cast as a “challenger,” meaning it executes well today but does not demonstrate an understanding of market direction, according to Gartner.
NetScout was not satisfied with that classification. It claimed Gartner violated the Connecticut Unfair Trade Practices Act and committed corporate defamation when it labeled NetScout a challenger and issued three cautionary statements about the company, including that it’s perceived as a “conservative stalwart” and lacks the “reach and mind share” many smaller competitors have.
The suit, filed Aug. 4, claims that Gartner employs a “pay to play” system that favors companies that pay Gartner analysts for consulting services, allegedly boosting their rankings in the report. In the lawsuit, NetScout said it has not paid Gartner for consulting services in the last five years, and called Gartner’s methods the IT industry’s “worst-kept secret.”
Gartner’s “pay to play” business model, by design, rewards clients “who spend substantial sums on its various services by ranking them favorably in its influential Magic Quadrant research reports … and punishes technology companies that choose not to spend substantial sums on Gartner services,” the lawsuit reads.
NetScout says it sought corrections
NetScout said it received a draft copy of the Magic Quadrant report for the Network Performance Monitoring and Diagnostics Market before it was published in March, and sought to correct what it said were factual errors about the company, but said Gartner published the report without making substantial changes.
NetScout, a public company that generated $397 million in revenue in fiscal 2014, is seeking damages and injunctive relief, and has requested a jury trial on all claims filed. Right now, the company appears to be thriving, posting $107.8 million in revenue in the first quarter ended June 30, up from $81.8 million a year earlier.
Jim McNiel, vice president of worldwide marketing at NetScout, said the company relies largely on word-of-mouth advertising from its customers, while analyst reports have a little less weight. Still, McNiel said “every voice is heard.”
“If somebody calls your child ugly, you care about it,” said McNiel, who declined to discuss the lawsuit. “We care about everything that is said about our company.”
Gartner spokesman: Suit has no merit
Meanwhile, Gartner spokesman Andrew Spender defended the company’s practices, though he declined to address the lawsuit in detail.
“While it’s not our practice to discuss pending litigation, we do consider this complaint to be without merit and intend to defend ourselves and the integrity of our research processes vigorously,” Spender said in an e-mail.
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