Pure and simple: Why Gartner's and IPOing storage biz's numbers didn't line up

I used to see this in the chemical industry when we invited the market analysts round, fed them tea and bickies and told them what the figures were going to be - and then they'd go off and publish some totally unrealistic crap they'd dreamed up through their own "research"

Analysts are loose cannons and should be ignored. In the main they're a bunch of jumped up hooray henrys who don't understand the market and business they are shadowing and simply make up rubbish

Pure intentionally misled on revenues?

If the below statement from Mr. Unsworth is true, and it most definitely is, then I think it's safe to say Pure management intentionally decided against correcting Gartner's incorrect revenue figures when they were sent for review and guidance.

"We send all estimates to vendors for review..."

The reason they would decide against correcting their revenue figures is obvious, but makes you wonder about the firm's integrity and what other goodies will be uncovered as the harsh light of being a public company hits them head on.

Very interesting times ahead.

So in other words, EMC XtremIO is actually seven times bigger?? You've got to be kidding me, Pure is smaller than Kaminario??

My idiotic neighbor works for Gartner, so I am not surprised.

surely nobody would take what is written in a Gartner MQ and immediately decide to purchase based on that info.

Due Diligence, RFP etc etc?

A couple of things

I worked in a server vendor's marketing department in a past life, and I can say when it came to IDC, we provided or validated information on shipments, but never on revenue. We left it up to IDC to determine an ASP and use that, along with a shipments estimate, to estimate revenue. Similarly, we tended to trust IDC shipment numbers for the competition, but not revenue numbers. We calculated our own revenue numbers based on what we heard for competitors ASPs from our sales field.

I assume Gartner uses a similar approach. So it is possible Gartner seriously overestimated Pure's ASPs, Pure's shipments, or both. So if Pure, as a start-up, is aggressively discounting to grab market share, and Gartner assumed something different for SSA ASPs, that could explain part of it. But it does not explain why channel checks did not reveal any potential errors in shipment numbers. For that matter, did Gartner do enough talking with customers? Or does Gartner not listen to their customers?

Regardless, this is a serious black eye for Gartner. "I got it wrong." What else has Gartner gotten wrong? They need a top to bottom scrub of their market share analysis and impacted reports (which include the MQs). Gartner should offer refunds or significant discounts for renewals to their customers.

Also, this HAS to impact the "Ability to Execute" axis of the SSA MQ for Pure. Ability to Execute is in large part derived from sales success. Gartner must republish the last two SSA MQs.

I know this Gartner analyst is saying it was his mistake, but there has to be some repercussion from this debacle no? This guys job is to be an "independent" research analyst so his credibility is absolutely shot. Imagine if an accountant said "whoops my bad" on certain numbers?? They'd be fired.

Does anybody else think the Gartner rep might actually just be the fall guy? He and Pure were in cahoots and if something were ever to go wrong aka they were to get caught then he just says "oops my bad wont happen again".So many conspiracies to think about!

Either way, it just stinks to high heaven all around.

Gartner and others such as IDC often get it wrong. And then keep in mind that larger vendors such as IBM, HP, EMC, etc. have an "analyst relations" department whose main goal is to "influence perceptions". I once held such a position at Sun. I allowed a firm to overstate shipments routinely as we had a diverse product line. (ie letting server revenue make up for declining workstation units and revenue in the 90s) The analyst firms have models which may or may not have any relation to reality. I once had an analyst firm that over forecast a market size by 10X.

Gartner is the most arrogant of the analyst firms and their MQ is nonsense. Vendors that can pay heavily for the right placement. How do they get there? "Payment to Gartner" on the vertical axis and "agreement with Gartner" on the horizontal one. Pure probably realized this was a good investment. And if Gartner overestimated why should they correct them? This is on Gartner not Pure. They got it wrong, I'm surprised they admitted it.

Orange Jumpsuits....

So let me get this straight - they used inaccurate revenue numbers (which they must have known were dramatically wrong) to heavily market and inflate their business over the last 2 years.

Good job they weren't a public company and they were using these inaccurate numbers to inflate a stock price otherwise the Execs and probably some people at Gartner might be wearing orange jumpsuits for real. Oh and the irony of the company name hasn't escaped me either!

It's Unfortunate

I think it's clear that Gartner is attempting to take this one "on the chin" to protect their business relationship with Pure and that's unfortunate. While Gartner may have in fact made a mistake, Pure did nothing to correct that mistake. At best Pure showed egregious irresponsibility by ignoring this. That would be incredibly hard to believe though. Even if Gartner did not ask Pure to review this ahead of time, they most assuredly would have known what Gartner was using as a revenue number at some point.

What Pure did was one of the most unethical maneuvers in the history of the competitive storage landscape. Pure leveraged this mistake to artificially solidify their placement in Gartner's Magic Quadrant. While any rational customer is not using the MQ as the sole criteria in their purchase decision, there's no denying that Pure's position got them attention they would not have had otherwise. It also gives them credibility they simply would not have earned otherwise.