KEY TAKEAWAY: Gartner of New York has built an $18 billion market cap company as the dominant IT research and product evaluation authority.
The Gartner Magic Quadrant offers widely trusted analysis and strategy guidance to chief information officers, enterprise buyers and other IT leaders. It is somewhat similar in stature to The MICHELIN Guide for restaurants or Condé Nast in luxury travel.
____________________________
All of my Substack content is free. Any subscription fees go to support my operating foundation, Veena Learning Institute, which creates videos for secondary school students, to show them how great smaller companies improve lives and make money. The first five are in Kenya - Twiga Foods (Pitahaya), Poa Internet, Wasoko (popup store logistics), SunCulture (battery-free solar powered irrigation), and Asante (girls education).
The photo is the endangered blue whale, native to the North Atlantic Ocean (IUCN 3.1)
__________________________________
The Magic Quadrant evaluates companies within a given market segment with respect to Completeness of Vision (x-axis), and Ability to Execute (y-axis). "Leaders", which succeed at both are in the upper right quadrant. Other quadrants include "Challengers" execute well but without a complete vision (upper left), "Visionaries" have a complete vision without great execution (lower right), and "Niche Players" have neither but can be successful in a sub-sphere (lower left).
For example, in the 2025 Data Science and Machine Learning Platform report, Google (Vertex AI), Microsoft and IBM were named leaders.
Magic Quadrants are usually published annually, using mostly human tasks requiring critical analysis and judgement, sort of what I'm doing here but a deeper dive.
These steps include detailed vendor questionnaires, analyst briefings and product demos, customer reference checks and third party and proprietary industry and market research. The results are tabulated, weighted and reviewed by peers and senior leadership within Gartner. Vendors have the opportunity to check the facts but not the analysis. The process takes 4 months.
Gartner has been challenged by a number of native AI market entrants, providing up to the minute market intelligence, but has retained its dominance because it provides authoritative evaluations rather than data.
However, Gartner's other reports on market trends published more frequently are vulnerable to AI generated up to the minute data. Gartner has maintained its revenue growth in recent quarters, but the stock market has reduced Gartner's trailing valuation multiples, questioning the future appeal of these other revenue sources.
Gartner's revenues have grown 12% annually over the past decade. It took cost cutting measures during the COVID-19 pandemic, such as drastically reducing travel and events, cutting Magic Quadrant reports in mature sectors, and cutting other interim reports without high margin subscription revenue.
These steps increased its gross margin from 60%-61% in the mid 2010s to 67%-67% in recent years. Its net margins increased from 5%-7% to 17%-19% during that period.
Somehow revenues kept growing despite the smaller product line. As a result, its net income grew 20%-21% annually over the past decade.
Next up, seasonings.