IDC / Statistics / Lies

I once heard that there are three kinds of lies: Black Lies, Little White Lies, & Sermon Illustrations  :-)

I'd like to add one to the list... "Precision Statistical Estimators".


In a recent edition of Information Week (Jan 31st, 2005, page 22), Paul McDougall quotes an IDC study that suggests that "software-on-demand" sales from full service IT vendors (like IBM, Sun, etc) will grow at a compound annual rate of 40.6% through 2008.


Cool! However, this rant is not about Information Week, or about Paul, or about IT Vendors, or about "software-on-demand". It is about the absurdity of high-precision swags. Projecting a new and speculative market tend to decimal point accuracy? Come on IDC, get real!!


We do need smart analysts to look at all the driving factors and give us reasonable estimates for various market shifts and opportunities. However, it would be much more credible, and useful, if they would say something like:


We project (with 90% confidence) that market demand for XYZ will exhibit a compound annual growth rate of 35-45% through 2008.


Sure, I might just plug 40% into my model. Or, I might have a more sophisticated model that looks at what-if scenarios at both boundary conditions (35% and 45%). But if you tell me that 40.6% is the answer, I'll tell you that you don't understand the question.


Last night on the news, the father of a missing child was asked if he considered asking a psychic to help find his daughter. He said that if that technique really worked, there would never be any missing children and everyone would win the lottery! I appreciate his rationality, and pray for his situation.


But, apparently, IDC thinks they can predict with stunning precision. Hey IDC - got any lottery numbers for me???
Comments:

Dave, you have struck a nerve :)

Posted by John Clingan on March 18, 2005 at 12:02 PM EST #

If you compare Gartner and IDC numbers, you will be surprise that they can vary widely. This applies for 'regular and past' numbers like how many servers sold each quarter. The infamous IDC's prediction Itanium is another example of mis-prediction. The Magic Quadrant is another famous example. I've stopped believing the analysts months ago... (they didn't give me much choice).

Posted by Iwan Rahabok on March 18, 2005 at 12:51 PM EST #

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