In that MQ, Gartner predicted that a quarter of all e-discovery companies would be consolidated by 2014, with the acquirers likely to be mainstream companies such as Hewlett-Packard, Oracle, Microsoft, and storage vendors. It also helpfully produced a list of vendors that could be acquired.

Consequently, this year’s report noted a number of acquisitions, including CaseCentral and Clearwell. The Clearwell acquisition, by Symantec, also pushed Symantec into the head position in the Leaders quadrant, from its position in the Challengers quadrant the year before.

Another big acquisition in the past year was the admittedly criticized purchase by HP of Autonomy. The company is considered independent enough from HP that it is still referred to as Autonomy in the report, and it appears to have improved its position since last year, with Gartner noting it is now being sold through the channel as well as direct.

And the acquisitions aren’t over, Gartner says.

Big vendors — such as HP, Symantec, IBM and EMC — have made acquisitions in this space and we expect that other big players will do the same, or build offerings of their own within the next 12 to 24 months. The next big round of acquisitions will be of legal review tools, with the capacity to perform the review, analysis and production functions carried out by lawyers and paralegals, in service firms, law firms, corporations and government agencies.

The functionality of the existing products is also expected to change, Gartner says.

This year, we expect to see a consolidation of functionality to deal with electronic information across a spectrum that includes identification, preservation, collection, ECA or early data assessment, processing, review, analysis and production of data. The market will contain software pure-plays (e-discovery only), as well as product groups or divisions in large well-known IT providers.

It’s slated to be a fast-growing market, though, with Gartner estimating that the enterprise e-discovery software market came to $1 billion in total software vendor revenue in 2010, with the five-year CAGR to 2015 to be approximately 16%.

The industry is also likely to see growth in e-discovery outside the U.S., where it has primarily been based. While the U.S. accounted for 85% of market revenue in 2010, vendor revenues outside the U.S. almost doubled between 2009 and 2010, Gartner noted, adding that many vendors will realize up to a third of their revenue outside North America during the next three years. Gartner also expects vendors in other areas, including enterprise information archiving, enterprise content management, enterprise search and content analytics, to start adding e-discovery functionality.

Gartner also emphasized that the E-Discovery Reference Model was playing more of a role in e-discovery, with users increasingly wanting vendors to support it.

Finally, e-discovery and the costs around it may end up encouraging users to delete outdated data — with the benefit of saving money on storage, Gartner said.

In that report, Gartner predicted that consolidation would have eliminated one in four enterprise e-Discovery vendors by 2014, with the acquirers likely to be mainstream companies such as Hewlett-Packard, Oracle, Microsoft, and storage vendors. Autonomy itself acquired Iron Mountain’s archiving, e-discovery and online backup business in May for US$ 380 million in cash.

HP offered the US equivalent of $42.11 per share for Autonomy, which it said was a 64% premium over the one-day stock price and a 58% premium over the one-month average stock price. The overall price is on the order of $10 billion.

Autonomy is a brand and marketing powerhouse that appears on many clients’ shortlists,” Gartner said in its earlier report. “Although we have seen little appetite for ‘full-service e-discovery platforms’ from clients as yet, Autonomy is positioned to seize these opportunities when they do arise — indeed, the overall market may evolve in that direction.”

HP’s chief executive officer, Leo Apotheker, formerly of SAP, has said he wants to focus on higher-margin businesses such as software and de-emphasize the personal computer business, said the New York Times. The company also said it is eliminating its WebOS business and is reportedly considering spinning off its PC business, just a decade after acquiring major PC vendor Compaq.

The AP, in fact, went so far as to say

[T]he decision to buy Autonomy also marks a change of course for HP, one that makes HP’s trajectory look remarkably similar to rival IBM’s nearly a decade ago. IBM, a key player in building the PC market in the 1980s, sold its PC business in 2004 to focus on software and services, which aren’t as labor- or component-intensive as building computer hardware.”

However, such a transition may not be easy, said an article in the Wall Street Journal, which examined how IBM had made that transition.

The Autonomy deal offered another advantage to HP, noted a different New York Times article. Like Microsoft’s purchase of Skype earlier this year, it gives HP the opportunity to spend money it had earned outside the U.S. — reportedly as much as $12 billion — without having to pay taxes on that money by bringing it into the U.S.

Other e-Discovery vendors include FTI Technology, Guidance Software, and kCura, the remaining vendors in the “Leaders” section in the Gartner Magic Quadrant. Less attractive, but also likely to be less expensive and, maybe, more desperate, will be the other vendors, such as AccessData Group, CaseCentral, Catalyst Repository Systems, CommVault, Exterro, Recommind and ZyLab in the “visionaries” quadrants, and Daegis, Epiq Systems, Integreon, Ipro, Kroll Ontrack,  as well as the ediscovery components of Lexis/Nexis and Xerox Litigation Services in the “niche” quadrant.

The first event was security vendor Symantec acquiring e-discovery vendor Clearwell. Dave Raffo already talked about the details of the acquisition; what’s interesting about it in this context is that it’s simply the first domino, as predicted by the second event.

The second event was Gartner releasing its first “Magic Quadrant” analysis of the e-discovery marketplace, which, among other things, predicted that a quarter of all e-discovery companies will be consolidated by 2014, with the acquirers likely to be mainstream companies such as Hewlett-Packard, Oracle, Microsoft, and storage vendors.

Symantec’s acquisition of Clearwell fit right into predictions: Clearwell was named to the leaders quadrant, and Symantec had been named to the challengers quadrant, meaning it primarily needed more vision — which Clearwell could provide.

Now it’s likely that in the kind of musical chairs M&A people go through because they don’t want to be the one standing when the music stops, the sorts of vendors Gartner talked about as acquirers — particularly the major vendors in the challengers quadrant, IBM and EMC, as well as Nuix — will start looking at the list of contenders so helpfully provided in the report.

Likely to be up, of course, are the other vendors in the Leaders quadrant – Autonomy, which just acquired niche player’s Iron Mountain’s digital business itself; FTI Technology; Guidance Software; and kCura. Less attractive, but also likely to be less expensive and, maybe, more desperate, will be the other vendors, such as AccessData Group, CaseCentral, Catalyst Repository Systems, CommVault, Exterro, Recommind and ZyLab in the “visionaries” quadrants, and Daegis, Epiq Systems, Integreon, Ipro, Kroll Ontrack,  as well as the ediscovery components of Lexis/Nexis and Xerox Litigation Services.

Anybody placing bets?