The Gartner Magic Quadrant is a framework looking at the competitive ability of four types of tech providers in a rapidly growing market. It looks at four profiles: challengers, leaders, niche players, and visionaries. This framework provides an overview of industry players to potentially identifying those players with the ability to create new market segments.
- Understanding the Gartner Magic Quadrant
- Applications of the Gartner Magic Quadrant
- Gartner magic quadrant example
- Key takeaways
- Connected Strategy Frameworks
- The FourWeekMBA Business Strategy Toolbox
Understanding the Gartner Magic Quadrant
The concept behind the Gartner Magic Quadrant comes from Gideon Gartner, who was one of the top Wall Street analysts in the technology sector. Gartner and the company he founded have historically released Magic Quadrant analyses on companies in the technology sector, giving awards to the best performers.
The quadrant itself seeks to divide any industry into four different sections: Challengers, Leaders, Niche Players, and Visionaries. Then, respective companies are placed in the quadrant according to their ability to execute (represented on the y-axis) against their completeness of vision (on the x-axis).
Let’s look at each of the four quadrants in more detail.
On the quadrant, challengers have a high ability to execute with low completeness of vision. These organizations may be profitable and influential in the short-term, but they are not unaware of the future direction of their company, products, market, or industry.
Leaders pair high completeness of vision with high ability. They are those that are dominating their industry and have good long-term prospects for remaining so.
Niche players do not have complete visions, but they don’t have the ability to realize a vision in any case. As a result, they are unlikely to outperform others to gain a competitive advantage through innovation.
As the name suggests, visionaries have high completeness of vision. In theory, they recognize the future direction of a product, market, or industry. But they lack the ability to make their visions a reality.
Applications of the Gartner Magic Quadrant
Provides a detailed overview of industry players
It’s important to understand that Gartner Magic Quadrant reports act like a recommendation site for businesses looking to hire for large technology projects. In much the same way that Yelp lists highly regarded restaurants, Gartner reports review and present relevant tech industry players.
Upon receiving the report, the hiring business can quickly assess each “applicant” in terms of their vision and ability to carry out that vision. It also gives the hiring business a broad overview of the market and also of the competitive positioning of each technology company. Perhaps most importantly, the business can match its specific needs with the strengths or abilities of an applicant company.
Has the ability to create new market segments
Gartner Magic Quadrant reports can sometimes lead to the formation of new market segments if the company deems them important enough.
Once defined, these new markets legitimize and boost the credibility of newer companies who may otherwise have been overlooked. This has obvious flow-on effects for sales, revenue, and profit generation. It also drives innovation and growth in the sector itself.
Gartner magic quadrant example
While Gartner releases regular reports on hundreds of industries each year, we will examine the 2021 report for the digital commerce industry.
Who are some of the challengers, leaders, niche players, and visionaries?
- Shopify – the SaaS platform for small to medium-sized businesses reported 40% year-over-year growth in 2020, with its API and Shopify Plus features used extensively by larger businesses. However, Gartner noted that Shopify’s total cost of ownership (TCO) may not be the cheapest on the market. Clients have also reported the difficulty in working with Shopify during contract negotiations.
- BigCommerce – another SaaS platform for small and medium-sized businesses that is cloud-based. BigCommerce has several clients with over $100 million in GMV and a strong presence in the United States. What’s more, the popularity of the platform is growing steadily in the Asia/Pacific and EMEA regions. Gartner cautions that BigCommerce has limited search engine and personalization functionality which may require third-party integration. The B2B offering is similarly basic and as a result, will likely not appeal to serious enterprise clients.
- Adobe – a company that has an established foothold in all major geographic regions and a diverse range of industries. Adobe Commerce is used by several clients with over $1 billion in GMV and is particularly favored by midsize companies that want a robust but customizable solution. Adobe’s global presence is seen as a major strength since it has a large number of service partners across all major markets. The characteristic modern and intuitive Adobe UI is also seen as a benefit. Looking forward, Gartner notes that the company’s low release cadence and lack of platform scalability may be cause for concern.
- Salesforce – another leader in digital commerce is Salesforce, a company that offers various B2B, B2C, and B2B2C solutions. Like Adobe, Salesforce has a truly global presence but with important partnerships with companies such as Alibaba in the Chinese market. To that end, the Salesforce platform offers exemplary localization capabilities with over 100 currencies supported. Despite its varied product range, however, it’s important to note that some platforms were acquired from other providers and as a result, are based on different underlying technologies.
- Oro – a B2B eCommerce and CRM platform headquartered in Los Angeles, California. Oro is a niche player because it has a specific B2B focus with requirements for an integrated CRM system for sales teams. Having said that, Oro supports multiple B2X models, including business-to-government (B2G) and business-to-employee (B2E). It also offers a modular and extremely customizable workflow that supports multiple use cases. Gartner suggests that Oro is unlikely to outcompete others because of a lack of partners in distributed order management (DOM), third-party logistics (3PL), and CRM.
- Kibo – a provider of single-tenant and multitenant SaaS with a reporting dashboard and an integration platform. Kibo primarily operates in the B2C space with most customers based in North America, and the platform excels in personalization features such as product and content recommendations, product collections, and native search results. Many of these features are free, which provides an important point of difference. Gartner notes that Kibo’s reliance on the B2C retail market in North America may hinder future growth.
- Oracle – Oracle offers single and multi-tenant commerce platforms with on-premise and cloud-based options. The company’s B2B and B2C commerce capabilities are used by enterprises in a diverse range of industries, with many clients enjoying features such as sales force automation, subscription management, and ERP. The cloud-based product also offers Design Studio, a tool enabling businesses to create a customizable storefront that can be targeted to various customer segments. Despite its visionary status, Gartner identified that the cloud-based platform was adding customers more slowly than its competitors. What’s more, it can only be deployed with Oracle’s own cloud infrastructure. This may limit the company’s attractiveness to clients wishing to use AWS or Azure, for example.
- VTEX – this company has a similar product offering to Oracle and is particularly dominant in the Latin American retail market. VTEX’s point of difference is extra functionality that extends beyond digital commerce. Features include marketplace operations, intelligent search, personalization, and a low-code, serverless development platform. There is also a diverse ecosystem of apps with over 400 available via the API and plug-ins. At present, VTEX’s platform is only available on AWS. This may hinder its ability to gain a foothold in the North American market if brands and retailers desire a non-Amazon-based solution. Gartner also noted that since most clients have GMVs under $50 million, enterprise prospects may have problems identifying comparable reference customers in their specific industry.
- The Gartner Magic Quadrant is a measure of a company’s vision for future growth, measured against their ability to realize that vision.
- The periodically released Gartner report is an industry-standard publication that allows businesses in search of new talent a holistic and detailed view of the technology sector.
- The Gartner Magic Quadrant can uncover new markets or perhaps new attributes with which to judge those markets. Potentially, this legitimizes newer players and leads to growth and innovation in the sector as a whole.
Connected Strategy Frameworks
Other related business frameworks:
- AIDA Model
- Ansoff Matrix
- Business Analysis
- Business Model Canvas
- Business Strategy Frameworks
- Blue Ocean Strategy
- BCG Matrix
- Porter’s Five Forces
- SWOT Analysis
- VRIO Framework
The FourWeekMBA Business Strategy Toolbox