Frost & Sullivan, Inc. History

Company Perspectives:

Our value proposition to clients is to optimize their business performance by offering diverse strategic solutions that capitalize on growth opportunities within new and existing markets. We will sustain long-term client relationships by providing measurement-based, solutions-focused marketing consulting services leveraging our relevant industry expertise. We will increase long-term stakeholder value through sustained profitability, dynamic fiscal management and prudent use of corporate assets. We will create a positive work environment for our employees that: promotes personal growth and learning; rewards effort, initiative, and innovation; and, provides an opportunity to share in the prosperity of the company.

Key Dates:

1961:

David L. Sullivan forms a market research and consulting firm in New York.

1972:

A Corporate Training division is founded.

1988:

Control of the company is acquired by Theodore Cross.

1997:

A stake in the company is bought by M.A.I.D.; a joint electronic data venture is formed.

1998:

The Stratecast Partners division is founded: the company moves to San Antonio, Texas.

2001:

The acquisition of Technical Insights expands technology research capabilities; the New York office is destroyed in the 9/11 attacks and layoffs follow as the U.S. economy dips.

Company History:

Frost & Sullivan, Inc. is a leading market research, executive training, and consulting firm that operates around the world. The company produces hundreds of in-depth written reports each year on a wide variety of subjects, trains executives in management and marketing skills, and sponsors business conferences that help corporate leaders network while learning about the latest market trends.

Beginnings

Frost & Sullivan's roots date to 1961, when Daniel Sullivan founded a consulting firm in New York City to serve the high-tech and industrial markets. During the company's first decade it focused on researching new technologies, distribution channels, and business trends, along with performing strategic analyses of competing firms. Frost & Sullivan's focus on technology was reflected in its own operations, being the first firm of its type to offer data on tape, with a report on the world military equipment market that was delivered in 1962.

Following a successful first decade in business, the early 1970s saw expansion to Europe with the opening of an office in London. In 1972 Frost & Sullivan established a Corporate Training division, which offered training in management and leadership, sales and marketing, and information technology. Another unit created during the 1970s was the Executive Summits division, which sponsored conferences for corporate executives to meet others in their industries and learn about market opportunities, technical trends, business strategies, and competitive threats. A new offering under development at the end of the decade was the World Political Risk Forecast Service, which would soon begin issuing reports and sponsoring conferences. At this time the growing company was increasing its analytical output, raising the average number of reports published from three per week to four.

During the 1980s Frost & Sullivan continued to develop new services, including the Market Engineering Consulting system, in which the company worked directly with clients to address industry challenges and problems. An offshoot of this system was a series of Executive Tutorial manuals that were written to help clients develop their own strategies for solving specific business problems.

In 1982 serious discussions were held with a foreign investor interested in acquiring the company, which was by now publicly traded, but talks broke down when a price could not be agreed upon. The firm had annual revenues of $9.1 million for the year, up from $6.8 million in 1980.

In 1987 Frost & Sullivan's political risk analysis service was offered online for the first time via the Data-Star system. The 5,000-page written report was initially offered electronically on a partial basis, with access to its full 85-country coverage added a few months later. The company's annual sales for 1987 were slightly less than $17.5 million, with net earnings of $290,000 reported.

During the mid-1980s Frost & Sullivan became the target of a friendly takeover attempt by New York publisher Theodore Cross. After he acquired 53 percent of the company's stock, much of it sold by executives of the firm, shareholders voted to accept $10 each for the outstanding shares. In January 1988 Frost & Sullivan was merged with a subsidiary of FAS Acquisition Co., which was owned by Cross and banking affiliates of E.M. Warburg, Pincus & Co., making it a private firm. Founder Daniel Sullivan continued to serve as president and CEO after the merger.

Asian Expansion in the 1990s

Frost & Sullivan expanded to Asia during the 1990s, opening offices in China, Japan, India, and Singapore. During the early part of the decade the firm developed several Customer Engineering Centers, located at offices in the United States and abroad, which were designed to help clients develop customer surveys and do analyses of product launches and development concepts. The centers' offerings were available in many different languages.

Continuing to seek out new avenues for electronic data transmission, Frost & Sullivan became one the first market research firms to offer its reports online. By the mid-1990s the company's research was accessible via the Market Analysis and Information Database, I/PLUS Direct, and DIALOG, which was a major resource for librarians and other academic researchers. Users could search the company's reports and download, for a fee, those parts that were of interest, saving money over the cost of an entire report (which averaged $2,200 and 350 pages in length). As the company's clients were primarily large corporations, which bought the full reports, this new availability greatly increased their potential audience.

By this time Frost & Sullivan's primary areas of research included computers and electronics, healthcare, high-tech manufacturing, telecommunications, and pharmaceuticals. Other reports were compiled by the firm in the areas of chemicals, materials, biotechnology, energy, environment, entertainment/leisure, household goods, office equipment, packaging, and plastics. Markets covered were mostly in the United States and Europe, but also included some in Asia and Latin America. Frost & Sullivan often contracted with outside experts to write reports on specific subjects, though many were written in-house.

Included in the firm's detailed reports were information on products and services that gave descriptions, technical characteristics, and background information; profiles of companies that covered their history, market position, and outlook; analysis of the market with information such as distribution strategies and political factors; and five-year and interim forecasts for the market and the specific products and companies involved. Titles of Frost & Sullivan reports ranged from "World Cancer Therapeutic Markets" to "Market Strategies for Board Games, Jigsaw Puzzles, and Playing Cards."

In 1997 a joint venture was created by Frost & Sullivan and M.A.I.D. plc (which later was merged into Dialog Corp.). The new Delaware-based company, Frost & Sullivan Electronic Distribution, was jointly owned by both firms, and held electronic distribution rights to all present and future Frost & Sullivan material. Some new market reports also would be created for distribution solely through M.A.I.D.'s Profound business information service. As part of the deal, M.A.I.D. acquired a minority stake in Frost & Sullivan.

In 1998 the firm created another new division, called Stratecast Partners, which performed strategic analysis for telecommunications industry executives. The division offered consulting and market research on communications companies and the technology sector. The year also saw Frost & Sullivan move its headquarters from New York to San Antonio, Texas, though it continued to maintain an office in New York.

2001 Purchase of Technical Insights in Boosts Technology Research

In March of 2001 Frost & Sullivan purchased Technical Insights, which offered several subscription-based technology research services, as well as analytical reports on the fastest-growing technological developments. The spring of the year also saw the launch of several web sites that gave users access to Frost & Sullivan research. These included www.pharma.frost .com, www.biotech.frost.com, www.healthcare.frost.com, and www.medicaldevices.frost.com, which contained information on markets and products in the pharmaceutical, biotechnology, healthcare, and medical devices industries, respectively. The company's main web site, www.frost.com, was launched as well. A news-by-email service also was offered, which enabled users to receive instant updates on recent advances and market trends. The company now was producing as many as 500 full market reports per year on a variety of topics, and press releases about their findings reached the news media with increasing frequency, giving Frost & Sullivan a heightened public profile. Frost's conference division also was continuing to produce a number of meeting events, such as the annual Internet Marketing Strategies Conference held for five days in July in San Francisco.

The September 11, 2001 terrorist attacks on the Pentagon and the World Trade Center had a double impact on the company. The first came on that fateful morning when debris from the attack hit a 26-story building at 90 West Street, 100 yards from the twin towers, where Frost & Sullivan occupied a suite of offices on the 13th floor. The building was engulfed in flames, sustaining heavy damage, and was near collapse by the end of the day. The firm's 28 employees were all evacuated safely, though one sustained an injury from falling airplane parts--the cockpit of the doomed American Airlines Flight 11 had reportedly landed on the building's roof. The company had no choice but to close the office and relocate its staff to other area sites, also transferring its sales activities to San Antonio.

A second impact of the attacks, which had cast a pall on the U.S. economy, was a drop-off in business for the firm. In October Frost & Sullivan announced layoffs of 10 percent of its worldwide staff of 700. The restructuring also included a shift in focus as the company addressed new marketplace needs, with business units that were less affected by the post-9/11 economic downturn given a heightened emphasis.

Frost & Sullivan now had offices in China, India, Malaysia, Singapore, Australia, Japan, Canada, England, Germany, and France, in addition to San Antonio, New York, and San Jose, California in the United States. The firm began seeking investors to help partner in offering new e-learning and instructor-led training programs. Most of its training sessions at this time were offered in London and typically covered management techniques and the impact of technology in the marketplace. Outlining the company's response to the changing world situation, CEO David Frigstad emphasized Frost & Sullivan's global presence; the frost.com web site, with offerings including subscription-based information delivery, real-time updates, and analyst video conferences; and the firm's consulting services, which used its research capabilities to provide analysis and strategies to address client needs.

After four decades in business, Frost & Sullivan remained a leader in the fields of market research, executive training, and consulting. The company continued to produce hundreds of market research reports and dozens of informational conferences annually, in addition to offering training and advising major corporations on strategy and marketing decisions.

Principal Subsidiaries: Frost & Sullivan, North America; Frost & Sullivan, EMEA; Frost & Sullivan, Asia.

Principal Competitors: Datamonitor plc; Gartner, Inc.; International Data Group; The Yankee Group; Ziff Davis Media Inc.

Further Reading:

• Baatz, E.B., "Mediocrity Rules at High-Tech Market Research Firms," Electronic Business Buyer, September, 1993, p. 80.
• "Dialog Expands Alliance with Frost & Sullivan," Information Today, May, 2002, p. 60.
• "Frost & Sullivan Lost Office in NYC Attack," San Antonio Business Journal, September 17, 2001.
• "Frost & Sullivan to Sell Controlling Interest to Princeton Publisher," Wall Street Journal, June 18, 1987.
• "M.A.I.D. PLC in Distribution Venture with Frost & Sullivan," Dow Jones News Service, July 9, 1997.
• O'Leary, Mick, "Frost & Sullivan Market Intelligence Completes 'Big Three' O," Information Today, May, 1995, p. 13.
• Thomas, Mike W., "Frost & Sullivan Cutting Staff in the Wake of Terror Attacks," San Antonio Business Journal, October 5, 2001.

Source: International Directory of Company Histories, Vol. 53. St. James Press, 2003.

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