The art of market analysis
Thursday, December 3, 2009 at 5:34AM Guest Blog
Bob Larribeau, a telecom industry analyst and technology consultant since 1992 has just retired. gazettabyte asked him to reflect on what it takes to be a good market research analyst.
"Most companies provide good numbers but some, quite frankly, are hard to believe."
Bob Larribeau
There are several skills a good industry analyst must develop. The ability to communicate well - in writing, in presentations and in informal exchanges - is critical, as is a broad knowledge of the telecom industry and its technologies. These days the ability to have a global view - an understand of developed, developing, and emerging markets - is also important.
In addition, there are two more skills an analyst must possess.
The first is the ability to develop a detailed knowledge of the industries covered. For telecom this includes knowledge of the service providers and vendors and the products and services they offer. Regularly publishing reports that compare results and market positions of the service providers and vendors is an important part of this process.
This skill includes evaluating data provided by service providers and vendors. It is important that definitions are aligned to be able to compare results from companies. It also requires detecting when data is misleading or false. Most companies provide good numbers but some, quite frankly, are hard to believe.
An analyst may also have to develop their own market metrics since the statistics provided by the vendors are inadequate.
When I started following the IPTV market I found it necessary to develop ways to use service provider subscriber counts as a metric. This worked well for most segments, but I had to work with video encoder vendors to use the number of encoders sold. The video encoder firms were willing to provide such information to have an independent view of market position. Such metrics developed by the analyst can provide a good assessment of the market and are likely to be the only choice.
Reporting market positions is the most sensitive part of an analyst’s job. No company is happy when an analyst’s assessment of market position does not match the company's own. A few companies believe that they can improve their market position by being aggressive with an analyst. The analyst must be able to listen to the company but cannot be browbeaten into changing his or her assessment. The challenge is doing this without disrupting an important relationship.
The second analyst skill is the ability to provide a short and long term view based on the data an analyst develops. This includes identifying key trends and understanding how these trends will affect the markets they study as well as how they will affect the participants. Providing a strong strategic perspective is what characterises the best analysts.
I developed business models for several markets I studied. I found that a simple business model can provide a good perspective on the problems that service providers face. Ten years ago one of my models showed that the financial structure of unbundled access in the U.S. market would make it difficult for the competitive broadband providers to be profitable, which was indeed true.
Business case analysis also showed that WiMAX could be a strong competitor to wireline broadband and that it will be difficult for mobile TV operators to make a profit on the service.
I also developed ways of assessing future market opportunity. I showed that there were few opportunities left for vendors in the IPTV market even though there was major growth in subscribers ahead. This conclusion was based on the assumption that it will be difficult to disrupt existing service provider/ vendor relationships in most market segments. This has proved to be the case even though many aspiring vendors felt that the market would be more open.
I found being an analyst a good job. It provided plenty of opportunity for creativity and allowed me to work with a lot of great people.
Bob Larribeau has worked on his own and for RHK (now part of Ovum) where he was responsible for its access and switching and routing services. He was also affiliated with MRG where he made contributions in broadband and developed its IPTV service. In 2004 he co-founded TelecomView with Ian Cox, another RHK alumnus. TelecomView analysed the market for WiMAX as well as broadband and IPTV.
Bob’s first project was a private analysis of the commercial Internet in 1992. In that year, commercial Internet revenues were $15M. In 1999 he wrote an analysis for RHK that forecast that IP traffic was about to eclipse both ATM and circuit-switched voice traffic and predicted the coming importance of MPLS in IP networks. In 2001 he began covering the IPTV market. Bob can be contacted at bob@larribeau.com
Bob Larribeau, IPTV, Market analysis, WiMAX in Blog, guest blog, market research Print Article 
Reader Comments (4)
Great article. Thank you Roy.
Having worked with many analysts over the years, I definitely agree with Bob. I always found my relationship with analysts to be enriching and enlightening. They are usually the most interesting folks in the industry, always ready for an intelligent discussion. I think the most valuable asset in an analyst is his or her ability to 'translate' their knowledge and the numbers into actionable information to vendors and operators alike. Anything besides that is a bonus... : )
Bob is a great guy and an excellent analyst. This is a loss to the industry.
Everything Bob says rings true with me.
Bob taught me a lot about being an industry analyst and it was a privilege working with him. He is also a world expert on medieval music and recorders, by the way, and I used to dance to his tunes quite often. (All the best Bob).