Tableau's Data Visualization: A Feature, Not a Platform

      The competitive position of Tableau hasn’t changed since I wrote my research paper at ARK Invest in the summer of 2015. The barriers to entry for data visualization are low, and competition is increasing. Clearly Tableau delayed moving from an enterprise software model to a software-as-a-service subscription model, and it is paying the price.

  Customer acquisition has slowed from over 50% annualized growth rate in 2013 to about 15% in 2016, underperforming our projections. Additionally, Tableau’s gross margin has slipped from 92% in 2013 to 86.7% during the first quarter of 2017, probably a function of pricing pressure in a more competitive environment. Its operating margin has decreased from roughly -7.5% in 2015 to -17% in 2016 suggesting its marketing and R&D budgets have not produced as much bang for their buck as they did historically.

  Interestingly during their last earnings call and analyst day, management didn’t acknowledge the competitive environment and seemed somewhat defensive, most likely because they are in the process of being disrupted. Tableau’s only barrier to competition is the quality of its product, and other technologies are gaining traction. Products such as Qlik’s Qlik Sense, Microsoft’s Power BI, and IBM’s Watson are aiming to displace Tableau. In fact, Tableau’s market penetration is even lower than we projected in 2015, suggesting that its technology is destined to be a feature in a larger data analytics suite rather than a platform upon which other innovation can take place.

           In the two years since I wrote “Tableau’s Data Visualization: Where’s the Moat?”, not much has changed… except for Tableau’s market cap. Since the summer of 2015, the company’s stock has dropped more than 50%, and I believe to the point of no return.

(Source: Yahoo Finance)

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