International Data Group

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International Data Group

One Exeter Plaza
Boston, Massachusetts 02116
U.S.A.
(617) 534-1200
Fax: (617) 262-2300

Private Company
Incorporated: 1964
Employees: 5,000
Sales: $880 million
SICs: 2721 Periodicals; 6719 Holding Companies Nec

With a global network of more than 190 computer publications in more than 60 countries, International Data Group (IDG) is a leader in information-technology publishing. In addition to its publishing divisions, IDG has top-performing research divisions and an exposition management subsidiary which runs computer-related conferences and exhibitions worldwide.

The roots of this enterprise reach as far back as IDG founder Patrick J. McGovern’s high school newspaper route. In 1953, with $20 saved from his route, McGovern combined carpet tacks, plywood boards, bell wire and flashlight bulbs into a computer that was unbeatable at tic-tac-toe. When he found people didn’t enjoy playing the machine if they were obliged to always lose, McGovern programmed it to make a mistake every 40th move, so contenders could occasionally win. This computer tic-tac-toe champion won McGovern a full scholarship to the Massachusetts Institute of Technology (MIT).

McGovern had gotten the computer bug from reading a book, Giant Brains: Or, Machines That Think, while in the 10th grade. McGovern later edited a Boston-based computer magazine put out by the author of Giant Brains. It was after MIT, while associate publisher of Computers and Automation, that McGovern began to witness the information gap between the companies making computers and the people who bought and used them. This was 1964, still fairly early in the computer age and the blooming field of artificial intelligence.

McGovern was tapped by rivals of IBM to conduct a market research program to determine where computers were heading and how they were being used. Firms such as Univac, Xerox, and Burroughs paid McGovern for his research and soon International Data Corporation (IDC) was born. He hired high school students across the country to help count computers and collect information. Within three years, IDC was grossing $600,000 and growing. Today IDC oversees worldwide market research services supported by the world’s largest database of computer sites and systems.

With his experience as associate editor and publisher of Computers and Automation —the country’s first computer magazine—and with a strong market research arm in place, the next logical step was publishing. McGovern got the idea when his research showed that computer systems managers were not aware of what others were accomplishing with computers, nor were they keeping up with products. In 1967 McGovern launched Compu-terworld, the flagship weekly that is now the cornerstone of IDG’s publishing empire. Introduced before the computer boom, the publication’s intent was to provide rapid-access information about new products and applications to computer department managers. It went from eight-page issues to 72-page issues within the first year; within five years, Computerworld had become the largest specialized business publication in the United States. Its readership today tops 650,000, claiming 25 percent of the computer publications market.

The launching of Computerworld led to the establishment of CW Communications, Inc., which was to become IDG Communications, Inc. when IDG was founded in 1967. IDG Communications, the publishing arm of International Data Group, produces newspapers, magazines, and books around the world. With the research arm of IDG locating computer vendors and users as well as potential advertisers and subscribers, IDG was able to pinpoint market opportunities for healthy publications. As early as 1972 McGovern began responding to the need for computer information outside of the United States. Recognizing that each country has its own information needs and application problems, McGovern sought to establish local publications in native languages. His first venture was Shukan Computer, a Japanese publication that drew on Computerworld while attuned to regional needs. IDG has a reputation for responding to new markets as they emerge. It has a current global network of more than 190 publications in more than 60 countries, covering 92 percent of the worldwide computer market.

The company boasts the largest editorial staff in the world—800 people linked by IDG’s International News Service. Success of the individual publications has been helped by IDG’s decentralized management structure. With mission and values defined at the top, the success or failure of individual publications depends on decisions made at the unit-level. This allows them to be responsive to their immediate market quickly. The staff at IDG headquarters in Boston has always been remarkably small and founder and chairman McGovern is said to spend most of his time on airplanes. Only financial control is centralized; each unit reports monthly and performances are shared to spur competition as well as cooperation. Another advantage of IDG’s structure is that articles can be shared by publications in different countries.

The third arm of IDG dates to 1976, when McGovern developed “Communications Networks,” in response to the rapid growth of telecommunications technology. IDG now offers the premier trade show for large users of communications technology. The IDG World Expo Corporation today runs 65 computer-related exhibitions and conferences in 21 countries, including Korea, Hong Kong, Japan, and Australia. World Expo produces conferences, seminars and trade expositions for the information technology industry worldwide, ranging from small regional programs to industry-wide conferences.

In keeping with its ear-to-the-ground timing, IDG announced the publication Macworld Magazine on the same day that the Macintosh computer was introduced. In 1980 it initiated China Computerworld, a joint venture with the People’s Republic of China. Within five years it had 100,000 paid subscribers and a 40 percent profit margin. The Beijing-based weekly was China’s first computer publication.

IDG is currently private; 35 percent of the company has been sold to a profit-sharing employee trust. McGovern has long made the claim that when the company reaches the $1 billion mark, IDG employees will become majority shareholders. In 1985 the billion dollar mark appeared to be on the horizon and McGovern was expressing a fascination with Japan. Since then, two publishing slumps have moved back the timetable for reaching the $1 billion mark.

The reasoning behind the company’s promise, according to McGovern, is that too many other businesses, after losing a founder or owner, find loyal staff and team members—those who have built the company—replaced. According to an in-house interview, McGovern has said that “What we try to do is build a global community of talented people who share a common vision of providing information services on information technology. And we want to have this community control its own destiny.”

Having started a stampede, IDG found itself in a crowded computer research market by 1984. The first shakeout in the computer publishing field hit. Magazines were folding or merging on a weekly basis. This was partly a reflection of what was happening in publishing as a whole: in recessions, advertising budgets are often among the first cuts and that immediately affects magazines. But it was also the result of a market glut. By 1985 there were roughly 120 larger computer publications fighting over limited readers and ads. Neck and neck with IDG through most of the 1980s was fellow publishing titan Ziff Communications Company. Ziff publishes industry staples, PC Magazine and PC Week, among others and, like IDG, has a research division. In IDG’s case, there are three separate research companies: International Data Corporation, Technology Investment Strategies Corporation, and LINK Resources. LINK tracks the demand side of the PC market, working to anticipate market acceptance of new technologies, as well as developing strategies for assessing growth of the home office market. LINK serves an international client base, providing research reports and proprietary studies. International Data Corp. monitors the supply side, gathering data from vendors and serving nearly 4,000 corporate clients worldwide. The research companies serve to provide the best computer-marketing information for clients. Naturally the corporate parent also benefits.

While the market slumped at home, changes abroad opened new doors. The same saturation was reflected in the United Kingdom, which went from a small number of computer magazines in 1981 to a high of more than 150 in 1985. The glut killed off 30 magazines that year alone. So IDG began looking to other parts of the world. In 1985 IDG began its first joint publishing venture with Hungary, producing Computerworld SZT and PC Mikrovilag. Here again, IDG was ahead of the trend. McGovern recognized the hunger of newly democratized countries to enter the Information Age. “In the former Soviet Union, and in the other Eastern European countries, they see high-tech as their ticket to making their future much brighter,” he said in an in-house interview. He claimed that unsold copies of IDG publications are unheard of in Eastern Europe. In nations that had been without political and economic freedoms, the urge to catch up with the computer world was fierce. Between 1986 and 1989 IDG’s revenues doubled as they entered new markets worldwide, including Japan, Taiwan, and the U.S.S.R. In April of 1988 IDG forged the first publishing joint venture agreement with the Soviet Union to publish the quarterly PC World USSR. It was the first Soviet magazine on computer technology.

There was another computer magazine industry shakeout in 1989. In that year IDG had folded or merged previously robust publications and closed 80 Micro and Macintosh Today. The culprit was flat ad spending again, but this time it was tied not only to the economy; readers were caught between generations of personal computers. Many publications were tied to aging computer systems such as the Commodore 64 or the Apple II, which were being eclipsed by newer systems. With the dramatic drop in the cost of personal computers in the early 1990s, many new users came into view, bringing with them different application needs. In 1989 the vast technological change within the industry meant consolidation and fallout, taking publications along. The worsening recession was an additional blow to ad revenues.

That same year ended with the fall of the Berlin Wall and the floodgates to a new market were opened. IDG launched new publishing operations in Yugoslavia, Czechoslovakia, Poland, Bulgaria, and Romania—in 1990 alone. Another magazine, Manager, was added to its USSR operations. Later, ventures were started up in Turkey, Slovenia, and Vietnam. In June of 1990 IDG and Nigeria-based WENCA Technology began PC World Africa. It appeared on newsstands in 20 African nations, none of them in South Africa. At that time, it was estimated that 15 percent of African businesses owned at least one personal computer. Also in 1990, IDG purchased the largest chain of PC-training schools in the United States, an expansion move away from the magazine market.

Much of IDG’s success was attributed to its decentralized management and its tradition of starting up magazines in-house, rather than by acquiring them, which is how many publishers grow quickly. In the 1990s IDG began buying publishing units. The first of these was Lotus Publishing Corporation, with estimated annual revenues of $10 million. Publications included Lotus magazine, a monthly for Lotus customers with a circulation of 368,000, and a line of books published in conjunction with Simon & Schuster. Electronic News was acquired by IDG from Chilton Co. Inc. in 1991. Again the sale’s figure was not disclosed. Electronic News, launched in 1957, became the leading publication for corporate and operational management in the $100 billion worldwide electronics industry. Its strength in covering key developments in microcircuits and electronic technology—a burgeoning aspect of the industry—was a solid addition to IDG’s family of publications and shared information.

In 1992 IDG purchased Electronics International, a 32-page weekly covering China’s electronics industry. The publication began in 1986 with only four pages an issue. The electronics industry in China had been growing at ten percent a year since 1989. Also in 1992, IDG announced it would be folding Lotus into PC World, claiming it would create the “nation’s largest computer magazine,” a claim disputed by other publications. Since its acquisition, Lotus had not been performing well due to its limited readership. This announcement stiffened the competition between Ziff and IDG for the dominant position in computer-magazine publishing. The claim was made that IDG was losing parts of its core market in the United States for the same reason it was successful abroad, and that it did not spend enough money to make its titles competitive. Though IDG was ranked ahead of Ziff in 1992, Ziff s market share was increasing.

Still, McGovern was very persuaded of the potential for growth in the computer publishing industry in late 1992. A drop in costs meant an increase in sales and users he argued, and “now there are more people regularly reading computer publications than there are people reading general business publications.” The increase in mail order computer sales, bypassing dealers and distributors, also translated into a boost for publications.

As it stands, McGovern expects his empire to be majority owned by its employees by the mid to late 1990s, when he hopes to hit the $1 billion in sales mark.

Principal Subsidiaries

IDG Communications; International Data Corporation; LINK Resources; Technology Investment Strategies Corporation; IDG World Expo Corporation; IDG Books Worldwide.