International Data Group, Inc.

views updated

International Data Group, Inc.

One Exeter Plaza, 15th Fl.
Boston, Massachusetts 02116
U.S.A.
(617) 534-1200
Fax: (617) 262-2300
Web site: http://www.idg.com

Public Company
Incorporated: 1964 as International Data Corporation
Employees: 9,000
Sales: $2.05 billion (1997)
SICs: 2721 Periodicals: Publishing; 2731 Books: Publishing; 6719 Holding Companies, Not Elsewhere Classified; 7389 Business Services, Not Elsewhere Classified; 8732 Commercial Economic, Sociological, & Educational Research

Over the course of some 30 years, Patrick J. McGovern has built International Data Group, Inc. (IDG) from a single-publication firm (Computerworld ) with a research division into the world’s leading information technology (IT) media, research, and exposition company. The company is a global leader in periodical publishing, book publishing, online information, research and analysis, conferences and expositions, education and training, and marketing services for the information technology industry.

IDG publishes 285 computer-related magazines and newspapers in 75 countries, of which more than 175 are country-specific editions of five global publication product lines: Computerworld/Infoworld, Macworld, Network World, PC World, and Channel World. IDG’s book publishing subsidiary, IDG Books Worldwide, is the fastest-growing computer book publisher in the world. Its highly successful… For Dummies series has more than 350 titles and 40 million copies in print worldwide. Online the company offers IDG.net (http://www.idg.net), the largest network of technology specific web sites around the world. Its research subsidiary, International Data Corporation (IDC), has research centers in more than 41 countries and serves more than 3,900 corporate and government agencies worldwide. Its trade show subsidiary, IDG World Expo, produces more than 110 conferences and expositions in 35 countries annually. Its training subsidiary, ExecuTrain, is the world’s largest computer training company, with more than 180 locations worldwide and 320 training courses. IDG also has a marketing services division to help leading IT companies build international brand recognition.

Founder Had Early Interest in Computers

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 did not 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 tenth grade. McGovern later edited a Boston-based computer magazine published by the author of Giant Brains. It was after MIT, while associate publisher of Computers and Automation —the first national computer magazine—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.

McGovern Founded International Data Corporation, 1964

In 1964 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 he established International Data Corporation (IDC) as a research and analysis firm. 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.

With his experience at Computers and Automation and IDC, the next logical step for McGovern was publishing. He got the idea for his first IT publication 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 he launched Computerworld, 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 pages to 72 pages within the first year; within five years, Computerworld had become the largest specialized business publication in the United States.

International Data Group Established, 1967

With the successful launching of Computerworld in 1967, McGovern formed International Data Group, Inc. as a holding company for his publishing and research ventures. IDG Communications, Inc., formerly CW Communications, Inc., became the company’s publishing arm, and International Data Corporation was its research subsidiary. The two divisions worked well together, with the research arm locating computer vendors and users as well as potential advertisers and subscribers and IDG Communications pinpointing market opportunities for healthy publications.

In 1972 McGovern began responding to the need for computer information outside of the United States. Recognizing that each country had its own information needs and application problems, McGovern sought to establish local publications in native languages. His first international venture was Shukan Computer, a Japanese publication that drew on Computerworld while addressing regional needs. IDG developed a reputation for responding to new markets as they emerged. Its global network of magazines and newspapers grew to include more than 285 publications in more than 75 countries by the end of 1997.

Produced First ComNet Trade Show, 1979

The conference and exposition management division of IDG dates to 1976, when McGovern developed Communications Networks in response to the rapid growth of telecommunications technology. In 1979 the first ComNet trade show was held, and it became the premier trade show for large users of communications technology. IDG World Expo Corporation, the company’s conference and exposition management subsidiary, has grown to produce a wide range of conferences, seminars, and trade expositions for the information technology industry worldwide, ranging from small regional programs to industrywide conferences.

In keeping with its ear-to-the-ground timing, IDG announced the publication of Macworld Magazine on the same day that the Macintosh computer was introduced in 1984. In 1980 it initiated China Computerworid, 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. It would be 1988 before IDG became the first U.S. publisher to enter the Soviet Union with PC World U.S.S.R.

Industry Shakeout in Mid-1980s

Having started a stampede, IDG found itself in a crowded computer research market by 1984. When 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 large computer publications fighting over a limited number of readers and ads. Competing head-on with IDG through most of the 1980s was publishing titan Ziff-Davis Communications Company. Ziff-Davis published industry staples PC Magazine and PC Week, among others and, like IDG, had a research division.

IDG Expanded Internationally

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 in 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 were 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 1988 IDG forged the first publishing joint venture agreement with the Soviet Union to publish the quarterly PC World U.S.S.R. It was the first Soviet magazine on computer technology.

Company Perspectives:

IDG’s diverse product and services portfolio spans six key areas including: print publishing, online publishing, expositions and conferences, market research, education and training, and global marketing services.

There was another computer magazine industry shakeout in 1989. In that year IDG folded or merged previously robust publications and closed 80 Micro and Macintosh Today. The culprit was flat ad spending again, but this time 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. The worsening recession was an additional blow to ad revenues.

Continued Expansion During the 1990s

The 1980s ended with the fall of the Berlin Wall, and the floodgates to a new market were opened. In 1990 alone IDG launched new publishing operations in Yugoslavia, Czechoslovakia, Poland, Bulgaria, and Romania. Another magazine, Manager, was added to its Russian operations. Later, ventures were started up in Turkey, Slovenia, and Vietnam. In June 1990 IDG and Nigeria-based WENCA Technology began PC World Africa. It appeared on newsstands in 20 African nations. 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 that led to the establishment of ExecuTrain, IDG’s training subsidiary.

To complement its tradition of starting up magazines in-house, in the 1990s IDG began buying publishing units. The first of these was Lotus Publishing Corporation, based in Cambridge, Massachusetts, with estimated annual revenues of $10 million. Its publications included Lotus, a monthly magazine for Lotus customers with a circulation of 368,000, and Lotus books, which were published in conjunction with Simon & Schuster.

Also in 1990, IDG Books Worldwide Inc. was established to publish quality computer books around the world. Within its first 14 months, it had published more than five national bestsellers in its … For Dummies series. In October 1991 it unveiled a new line of books published in association with Compaq Computer Corporation called Compaq Authorized Editions. The books were aimed at technical managers and developers as well as computer users.

For 1990 IDG had annual revenues of $620 million and 3,800 employees. It billed itself as the leading global provider of information services on information technology (IT). IDG Communications, its publishing subsidiary, published more than 150 newspapers and magazines in 49 countries. Its leading titles were PC World, Infoworld, MacWorld, Lotus, and Computerworld. International Data Corporation, IDG’s research subsidiary, was a leading market research and analysis firm covering the computer field. World Expo Corporation, IDG’s exposition management subsidiary, ran 48 computer-related exhibitions and conferences in 18 countries. IDG Books Worldwide Inc., established in 1990, was the publisher of the … For Dummies series of books on computers and other topics among its other book publications.

In 1991 annual revenues rose to $770 million, and the company had 4,000 employees. It acquired Electronic News from Chilton Co. in 1991. Electronic News, launched in 1957, was the leading publication for corporate and operational management in the $100 billion worldwide electronics industry. One year after the acquisition, McGovern acknowledged that it was losing money, as much as $6 million a year according to one source. In 1992 McGovern cut the paper’s budget and raised the subscription price.

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 a rate of ten percent a year since 1989. Also in 1992, IDG announced it would be folding Lotus into PC World, saying 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-Davis and IDG for the dominant position in computer-magazine publishing. Though IDG was ranked ahead of Ziff-Davis in 1992, Ziff-Davis’s market share was increasing. When Lotus was combined with the much larger circulation magazine PC World, readership was boosted to 901,000 for the combined publications. Rival PC Magazine, published by Ziff-Davis, offered advertisers a readership of 900,000.

IDG and Ziff-Davis had different marketing styles. Where IDG served many market niches and published in more than 50 countries, Ziff-Davis focused on a few specific markets, such as IBM-compatible computers and mail-order computers, and published several titles for each market. It also operated in only three countries outside the United States—the United Kingdom, France, and Germany—and licensed nearly 20 publications in Asia and other European countries. In terms of advertising dollars, Ziff-Davis claimed a 37 percent share of the computer magazine industry’s $871 million in U.S. advertising dollars, while IDG lagged with a 27 percent share. One industry analyst estimated that Ziff-Davis’s PC Magazine had advertising revenues of $200 million annually, compared with PC World’ s ad revenue of $60 million.

Combining Lotus with PC World was part of IDG’s response to flat ad sales in 1992. It closed, combined, and sold off other magazines. Many of its periodicals were low-risk, small-circulation computer magazines serving a diversity of markets. The trend among advertisers was to favor large-circulation periodicals, causing IDG to re-examine some of its smaller publications. For example, it sold Digital News, a periodical for users of computers made by Digital Equipment Corp. Advertising had been falling at a rate of 20 percent a year. Computer Buying World was merged with Info World, a magazine aimed at corporate personal-computer professionals.

During 1992 IDG increased its focus on government computer users by forming the Government Information Technology Group. The new group merged Information Strategies Group, an information technology research and consulting firm, and FCW Publishing Corp., which published Federal Computer Week. Kenneth Kaplan, CEO of FCW and publisher of Federal Computer Week, was named CEO of the new group. At the time of the announcement, McGovern noted that various levels of government in the United States represented a $38 billion information technology business with specialized information needs.

IDG expanded internationally in 1992 by launching three national editions of PC World in Asia: PC World Hong Kong, PC World Singapore, and PC World Malaysia. They brought the total number of publications in the IDG family to 181 periodicals in 58 countries. IDG already published national editions of Computerworld in those three locations. Locally written, managed, and produced, the three new editions of PC World, like other IDG periodicals, would have access to the IDG News Service, which linked the company’s journalists around the world. IDG published about 20 periodicals in Asia with the addition of these three new ones. Later in 1992 it launched PC World Vietnam.

In 1993 IDG continued to launch new publications and published a total of 194 computer newspapers and magazines in 62 countries by mid-year. Annual revenues were around $800 million. As was the case for several years, McGovern owned 65 percent of the privately held company, and its employees owned the rest.

Revenues Reached $980 Million in 1994

Fiscal 1994, ending September 30, was the best financial year to date in the company’s history. At the end of the fiscal year, Kelly Conlin, formerly with the IDG Marketing Services Division, was promoted to president. James Casella, former president and chief operating officer of InfoWorld, was promoted to chief operating officer of IDG. Annual revenues were more than $980 million, and the company’s international workforce had grown to 6,800 employees. It published more than 220 newspapers and magazines in 64 countries. The book division, IDG Books Worldwide, was experiencing tremendous growth with its … For Dummies series and had its books translated into more than 25 languages. Toward the end of 1994, IDG Books Worldwide announced the publication of the first Compaq Press book, The Internet. It was an easy-to-read guide for computer users. The IDG News Service, which served the staffs of the company’s publications, received a boost when IDG and Business Wire entered into a strategic marketing alliance whereby Business Wire would deliver high-tech news to all of IDG’s high-tech publications and research offices throughout the world.

In 1996 revenues exceeded $1.7 billion. The number of company periodicals had increased to 275, and IDG Books had some 450 titles in print. World Expo Corporation produced some 90 computer-related expositions in 35 countries. International Data Corporation had expanded into 51 offices in 43 countries. IDG’s operating companies had more than 135 web sites.

In 1997 IDG hoped to expand its periodical base by addressing the emerging digital industry, especially that involving “the intersection of technology, the Internet, entertainment, and media,” according to a company announcement. It established a new business unit and hired as its head John Battelle, co-founder of Wired magazine and a key executive in the development of that publication. IDG had been building its computer content on the web with more than 140 web sites spanning more than 50 countries. It introduced IDG.net, which gave readers access to content, and IDG Global Web Ad Network, which gave advertisers access to a wide range of computer buyers on the web. New publication launches included JavaWorld, Netscape World, The Web, and more than 50 others internationally.

At the same time that Apple Computer Inc. announced it would enter into a partnership with Microsoft Corporation, IDG and Ziff-Davis announced they would restructure Macworld, an IDG monthly, and MacUser, a Ziff-Davis weekly, under a joint venture called Mac Publications LLC. The consolidation was due in part to falling ad revenues and Apple’s declining share of the desktop PC market. Macworld claimed a paid audience of 625,000, while MacUser controlled a circulation base of 100,000.

For fiscal 1997 IDG announced revenues of $2.05 billion. The company had more than 9,000 employees worldwide. IDG Books Worldwide had more than 500 titles in print in 38 languages. IDG.net had grown to 210 web sites in 52 countries. IDG World Expo was producing more than 110 conferences and expositions in 35 countries. ExecuTrain, the company’s training subsidiary, offered more than 320 training courses in more than 180 locations. International Data Corporation, the company’s original research arm, had research centers in more than 41 countries and more than 400 research analysts.

There appeared to be no limit to how much IDG could grow. In April 1998 it launched Industry Standard, a news magazine of the Internet economy. Developed by Patrick McGovern and John Battelle, it was the newest of IDG’s 285 magazines and newspapers. An online version was available at www.thestandard.net.

Principal Subsidiaries

IDG Communications Inc.; IDG Books Worldwide Inc.; IDG.net; International Data Corporation; IDG World Expo Corporation; ExecuTrain; IDG Marketing Services.