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ESG's Friends & Family Deals: Page 4 of 5

Scott adds that ESG has never asked his company for shares. "Though Steve is very colorful, he has never approached me or anyone else at 3PAR with such a request."

To put this issue in context, it's important to realize that the practice among cash-strapped technology startups of granting shares to suppliers -- such as PR agencies or Web design firms -- is very common. But an "independent" analyst firm is in a different boat, and the fact that ESG has accepted equity in companies it's supposed to be critiquing does raise the question of whether the firm can remain objective in its analysis.

A general skepticism about the independence of so-called independent analysts has always existed, but lately it's been fueled further by allegations of conflicts of interest among Wall Street banks' investment arms and their stock analysts. The issue has affected everyone in the business. Forrester Research Inc., for example, recently issued a statement that it will no longer conduct sponsored product comparisons. The research firm was reacting to criticism that it didn't properly disclose that a study it published was funded by Microsoft Corp. (Nasdaq: MSFT) -- a report that found (surprise!) developing applications on Linux and Java is more costly than using Microsoft technologies.

A longtime storage industry executive, who asked to remain anonymous, offers this observation: "Irrespective of the type of remuneration received -- money for services, stock for services, food for services -- a company that doesn't separate its forecast/opinion group from its paid consulting group should have every piece of advice it offers taken with a grain of salt."

But Duplessie insists that he treats everyone, large or small, with equanimity.