In 2009, two powerful forces will collide in the IT market: a deep global recession, and a radical IT industry transformation that has been in progress for the past several years. These two forces, interacting with each other, loom large in virtually all of our 10 predictions themes for 2009:
- Global IT growth will be cut in half — it will be critically important for suppliers to orient toward segments that are spending at above-market growth rates.
- Emerging markets and small businesses spending will slow significantly — but outperform the market even more than in 2008.
- The IT industry’s expansion to “the cloud” will accelerate — as the bad economy drives more users to the cloud model’s low costs, and IT suppliers follow suit.
- The struggling offline economy will drive more shoppers to the online economy — as over 1.5 billion people go online, driving over $8 trillion in online sales.
- The telecom industry will consolidate, and expand, in 2009 — driven by the need for scale in developed markets, a wireless land-grab in emerging markets, and the promise of the cloud model to greatly expand telcos’ value-added services.
- It will be a grim year for mobile gadgets — as volume growth flattens in mobile phones, as netbook PCs expand the market but threaten notebook pricing and margins, and as consolidation looms in personal navigation devices.
- The crumbling of the “business/personal” wall in IT will accelerate — as the economy and the “2.0″ culture drive consumer and business technology together, opening new opportunities and threatening to create new IT industry dinosaurs.
- The reinvention of information access and analysis will accelerate in 2009 — driven by blow-back from the financial industry fiasco, the growing information avalanche from social networking and digital video, and the ambitions of key vendors to own the last — and most strategic — patch of IT market real estate.
- Green technologies will have a good year, disguised as “cost cutting” — with good demand for green tech that can deliver near-term savings, but temporarily shoving capital-intensive green investments down the agenda.
- Government initiatives in 2009 will catalyze massive IT investments and industry growth — focused on economic recovery, energy and health industry streamlining, and improving financial markets’ stability and transparency.
In This Study
As we have for the past three decades, IDC ends the year with our outlook for the coming year in the information technology (IT) and telecommunications market. During the next 60 days, IDC will publish literally dozens of IDC Top 10 Predictions documents for 2009, each focused on a specific portion of the market: a technology product or service category, a country or region, the consumer market, the small and medium-sized business sector, an industry within the business sector, or channel and partner networks. These documents summarize our researched points of view about the forces shaping each specific segment, along with predictions about what actions vendors and users will take in response to those forces.
As always, we start “predictions season” with this, our broadest outlook for the overall technology marketplace. To create this document, we polled the nearly 1,000 IDC worldwide analysts for their take on what the coming year holds in store for the IT industry and synthesized and validated those views, as well as filtered them down to a core set of predictions that:
- Illuminate key growth opportunities for 2009
- Are relevant to many different segments and players in the IT marketplace
- Require major structural change within companies and across the industry — and therefore present a unique opportunity for competitive advantage for those companies that recognize and navigate through the market’s changes faster and better than others
Since our “top 10″ format allows us only limited space to predict the coming year for the entire market, we know our predictions list is by no means comprehensive. Some themes and events that may be very important to you and your part of the market may be missing. (We urge you to check in regularly in the next 60 days at IDC’s Predictions Web page [www.idc.com/research/predictions09.jsp], where you’re certain to find more detailed discussion of your market segment’s future.)
2009 IDC Predictions Team
Michelle Bailey, Shiv Bakhshi, Irene Berlinsky, Ray Boggs, Angele Boyd, Philip Carter, Gabriella Cattaneo, Crawford Del Prete, Lee Doyle, Matt Eastwood, Michael Fauscette, Jill Feblowitz, Susan Feldman, Lidice Fernandez, Steven Frantzen, John Gantz, Frank Gens, Al Gillen, Randy Giusto, Stephen Hendrick, Kazuyuki Ide, Earl Joseph, Susan Kevorkian, Gary Koch, Danielle Levitas, Mark Levitt, Robert Mahowald, Stephen Minton, Masaaki Moriyama, Chris Morris, Henry Morris, Claus Mortensen, Graeme Muller, Courtney Munroe, Rick Nicholson, Bob O’Donnell, John Roberts, Junichi Saeki, David Tapper, Mary Johnston Turner, Vernon Turner, Rick Villars, Ricardo Villate, Hideo Wada, Karsten Weide, Craig Williamson, Mark Winther.
In 2009, the IT market as a whole will be shaped by two major forces colliding with each other as a deep global recession meets the ongoing IT industry transformation.
The first force, the recession, will have a huge impact on the market, as we’ll see in prediction number 1: worldwide IT spending growth will be cut in half. 2009 will be a year of major belt-tightening for customers and suppliers alike, with IT spending skewed toward investments that either cut costs for existing activities or offer more efficient ways to capture new growth.
But in 2009, there is a second powerful force that will also be at work: the ongoing, radical transformation of the IT industry. As discussed in IDC’s Top 10 Predictions documents for 2006, 2007, and 2008, a “total industry makeover” has been in progress for several years, driven by the intensifying need to expand industry growth by reaching historically underserved markets (e.g., emerging markets, small and medium-sized businesses [SMBs]), and the emergence of technologies and business models (e.g., cloud computing, green IT, collaborative development) that allow the industry to reach those markets in a profitable way. This transformation has been steadily shifting IT suppliers’ offerings and business models along several disruptive vectors toward a new IT marketplace that will be markedly more:
- Emerging markets, small business, and consumer influenced
- Internet infused
- Solutions packaged
- Heavily instrumented and flooded with information
As we developed our predictions for 2009, it was clear that these vectors of change will continue to shape the long-term future of the IT market. But the big question we had to answer was: What will happen in the near term, in 2009, as these six transformation vectors meet the recession and a market in which IT investments will surely be more limited and more highly scrutinized?
It might be natural to conclude that the recession will cause customers and suppliers alike to simply “hunker down” and put these major industry shifts “on hold” for the year. But as you’ll see in our 10 predictions for 2009, IDC believes the net effect will actually be the opposite: the slow global economy will act like a pressure cooker on the IT market — actually speeding up the shift to the new marketplace we’ve discussed in the last several IDC Top 10 Predictions documents.
This is because, while all sectors of the market will experience significantly lower growth in the coming year, these six transformational vectors will take less of a beating than the traditional IT areas. The reason is simple: in a tight economy, the benefits of these disruptive customer segments, offerings, and models — of emerging markets (robust economic growth), cloud IT (lower costs), mobility (ability to leverage remote workers), sustainability (resource efficiency), better information management and analysis (better decisions, allocation of resources) — will be magnified. Suppliers and customers will gravitate to them not because they are about the future, but because they offer practical benefits today. As a result, these vectors — even as they have lower growth than in 2008 — will actually gain share faster in the down economy.
It is impossible, of course, to capture all of the interesting and important dynamics for the coming year in 10 prediction categories. We apologize in advance if we’ve missed a prediction theme that is going to be very important to you in the coming year — it will undoubtedly be discussed in one or more of the dozens of IDC Top 10 Predictions documents to follow. But we do believe the following 10 themes are the ones most likely to be at the top of most industry executives’ agendas, across many sectors, in 2009.
As usual, we start our predictions with a look at the growth prospects for the IT market as a whole, which sets the context for all the predictions that follow.
1. Global IT Growth Will Be Cut in Half
The biggest factor shaping the IT market in 2009 will be the slowing global economy:
- Global growth will be cut in half and take three years to come back. With economists forecasting dramatically slowing global GDP, IDC predicts global IT spending growth to slow to 2.6% — half of 2008’s 5% growth rate, and far below 2007’s 7% rate. The slower growth will effectively strip out $35 billion of potential growth in 2009 (the equivalent of eliminating all of Cisco’s or Intel’s 2007 revenue). We also predict it will take three years for IT to return to 2008 growth rates.
- IT hardware will see a rough year. Looking below the top line, we predict a very tough year for IT hardware, with negative growth for PCs, servers, and networking equipment. Software and services will also feel the pinch — with growth rates down about one-third from 2008 levels but still above the overall IT spending growth rate.
- Major economies’ growth will be close to flat. A look at the major regions shows that IT spending growth in the United States will drop by almost 80% to just below 1%, while Western Europe and Japan IT spending growth will hover right around 1%. As we discuss in prediction number 2, emerging markets will still be among the bright spots in the IT economy.
As a result of this poor growth environment, it will be critically important for suppliers to look below the surface and more quickly and decisively orient their businesses toward customer segments that are spending at above-market growth rates, and toward offerings with benefits that are magnified in a down market. In the next several predictions, we discuss several of these strategic areas for 2009.
2. Emerging Markets and Small Businesses IT Spending Will Slow Significantly — But Outperform the Market by an Even Wider Margin
While emerging markets will slow down in 2009, due to the impact of the global economic crisis, IDC predicts that they will continue to significantly outperform developed economies in IT spending growth:
- Emerging markets growth rates will shrink, but expand their growth advantage over developed markets. The IT spending growth rate in emerging markets will drop by one-quarter, from 10.4% in 2008 to 7.8% in 2009. Yet the growth advantage of emerging markets over the market as a whole will expand in 2009, with emerging markets growing at three times the rate of the overall IT market, in contrast to their “2x” advantage in 2008. In 2009, it will also become clear that emerging markets are not just about high growth rates but are increasingly about markets with scale as — for the first time — emerging markets will account for more than one-fifth of all IT spending worldwide.
- BRIC and beyond will drive growth. The BRIC markets — Brazil (9.1% growth in 2009), Russia (7.5%), India (10%), and China (9%) — will continue to drive the bulk of emerging market expansion. But as we pointed out last year, the next nine countries beyond BRIC — in the Middle East, South Africa, Southeast Asia, and Latin America — will continue to develop as the next frontier of IT investment and economic development. As with the BRIC countries, their growth will be down significantly in 2008 but will still fall in the relatively “explosive” 5–12% range.
- Africa will be a bright spot. Interestingly, Africa will remain a particularly bright spot among emerging market regions, due to government-led infrastructure development projects in many countries and the relatively limited exposure many of the region’s less developed economies have to the financial crisis. Healthy IT market growth is projected for North Africa in particular on the back of government IT development initiatives, increased foreign direct investment (FDI), and revenue from oil and gas. While GDP growth estimates have been halved for South Africa, any downturn is being offset by major investment initiatives such as the Accelerated and Shared Growth Initiative for South Africa (ASGISA), the 2010 FIFA World Cup, the Gautrain rapid rail system, the launch of a second national network operator, and expanded investments into energy and transportation infrastructure. While East Africa continues to be weighed down by political tensions in several countries and rising energy and food costs, the region has also begun to benefit from increased international investment, most notably from China and Western Europe in the construction and mining sectors. All together, the African IT market is expected to grow a very healthy 9% in 2009.
- SMB IT spending growth rate will slow, but still beat the market. Another type of “emerging market” is the small and medium-sized business sector — a sector that has traditionally been underserved but has consistently delivered superior growth in recent years. In 2009, IT spending by SMBs in will slow to 3.6%, down from 2008’s 6.1% growth. But, as with emerging markets, SMB spending will slow less than the overall market, expanding its growth advantage from 1.2x the market in 2008 to 1.4x in 2009. This is counter to the conventional wisdom that “when the economy gets a cold, SMBs get pneumonia.” But historical IDC data suggests that SMBs are slower to reduce IT spend growth in bad times, and faster to gear back up in recovery. One reason is that SMBs more typically only buy IT (and other resources) out of absolute necessity, and don’t generally have a backlog of previously purchased IT to digest.
In short, even though their 2009 growth will be lower, the growth advantage for both emerging markets and SMBs will be bigger — that is, they’ll “gain share” as a portion of the IT market. This will make emerging markets and the SMB customer segment even more strategic in 2009.
3. The IT Industry’s Expansion to “the Cloud” Will Accelerate
In the past several IDC Top 10 Predictions documents, we’ve highlighted the growing importance of the cloud delivery model (the real-time delivery of business and consumer services over the Internet) as a foundational piece for the next 20 years of the IT market — particularly for profitably reaching and capturing the increasingly strategic emerging and SMB growth markets. And as we’ve predicted for the last two years, many of the major players — most recently and notably, Microsoft and IBM — have launched major cloud initiatives, declaring their intent to be market makers in this emerging and important space.
- While the downturn will slow cloud services growth in 2009, cloud growth advantage over traditional models will expand. We predict that in 2009, while IT cloud services offerings — including software as a service (SaaS), cloud server capacity, cloud storage, and so forth — will slow in growth, they will slow by a smaller amount than their traditional IT alternatives and will therefore outperform them by an even greater margin than in 2008. For example, our precrisis SaaS forecast predicted 2009 growth of 31%, over four times the growth of the software market as a whole. We have not yet finalized a revised (postcrisis) growth forecast for SaaS spending, but our current thinking is that growth will decline by significantly less than the overall software market, increasing the SaaS growth multiple to over five times that of the overall software market. The cloud model’s advantages of lower capital outlay and operating costs, coupled with the reassurance of more major players coming on board and building out capabilities (including enabling and educating the channel), will encourage more customers at the margin to invest in cloud offerings.
On the vendor side, we predict these next steps in the industry’s buildout of the cloud model:
- Remaining key IT players will declare strategic commitments to the cloud model. Look for two companies in particular that have had relatively little to say about cloud as a core strategic direction — Oracle and HP — to make bigger moves and clearer statements of strategic intent. Look for HP to use EDS as the foundation of its cloud services delivery strategy, and create cloud services offerings at an aggressive pace through EDS in 2009.
- Cisco will make another big move toward business solutions. Cisco, which has been building its cloud strategy around WebEx, may make another big investment (of a business application SaaS player — like NetSuite, Salesforce, or Intuit) as it realizes collaboration services may not be a sufficient platform alone to support its business solutions provider ambitions.
- IBM will go into “fast ramp” phase with its cloud portfolio. IBM, which in 2008 has been in pilot mode in its cloud rollout (cloud appliances, selected SaaS offerings, online solutions/SaaS marketplace), will begin to enter the “fast ramp” stage — with rapid expansion of target customer segments beyond the pilot program, increased marketing and sales resources, more aggressive partner recruitment and enablement and, finally, the announcement of a converged online platform.
- IT services players will get on board the cloud. Look for several of the major system integrators (SIs) to expand their SaaS/cloud integration capabilities and outsourcers/managed services providers to add “cloud” model offerings to their services delivery portfolios.
- Google will acquire Salesforce (finally) or another business apps platform. Now that Microsoft has declared its intent to expand more broadly to the cloud, Google will finally make a move for Salesforce.com, or another business applications platform and portfolio (e.g., SugarCRM): an essential ingredient to building up its position as an SMB destination. (Yes, this is the third year we’ve made this prediction: perhaps the third time will be charmed.)
- Look for a flood of cloud partnerships. Since the cloud model is a model that more readily enables, and rewards, integration of separate IT product offerings into highly relevant customer solutions, expect to see many more cloud partnerships across traditional IT product segments — particularly among major infrastructure providers, such as EMC, IBM, HP, Dell, and Sun; application vendors, such as Oracle, Microsoft, SAP, and Salesforce.com; and services players (including telecom services providers — see prediction number 5).
- Lots of next-generation (cloud-optimized) systems will announced. In 2009, look for a continuing stream of announcements for cloud-enabled and cloud-optimized storage, server, and networking systems (EMC’s Atmos is a recent example). The cloud model will drive many designs for next-generation systems at both the low end (cloud-enabled appliances) and the high end (high-performance systems for cloud services providers).
- Lots of customer spending will be on the “enterprise cloud.” The economic crisis will drive relatively strong demand by businesses for technologies that deliver cloud-like efficiencies — denser servers, thin provisioning, virtualization, and so forth — to take down costs in their IT operations.
- Traditional IT suppliers will announce “bridges” between cloud services and traditional (on-premise) IT environments. Look for leading systems management software vendors in particular — such as HP, Microsoft, IBM/Tivoli, CA, and Symantec — to expand their systems’ ability to manage virtualized resources, to include virtualized resources in the cloud. Look for similar “cloud/on-premise” bridges in the information management space as well.
4. The Struggling Offline Economy Will Drive More Shoppers to the Online Economy
While the buildout of the next-generation business and consumer cloud economy expands in 2009, the maturing first-generation digital marketplace — offering bargains for customers and lower costs for merchants — will offer a more attractive venue than ever, and take share from the struggling offline economy:
- Online people will exceed 1.5 billion. Commerce starts with people, and IDC predicts that the number of people on the Internet will exceed 1.5 billion — almost one-quarter of the world’s population — for the first time in 2009, with over one-half of them from the relatively high-growth emerging markets. Almost half of Internet users will also be online buyers in 2009.
- Online commerce will break the $8 trillion barrier. The growth in online shoppers and buyers will drive global Internet commerce to over $8 trillion for the first time — not a surprise as a growing number of shoppers consider the Web a global bargain outlet. It’s important to note, though, that the online economy will still certainly suffer from the economic downturn — as that $8+ trillion in sales represents a significant “haircut” in growth, which we predict will be closer to 10–12% than 2008’s 16–18%.
- Online advertising, while under pressure, will grow by nearly 10%, as offline shrinks. In the down economy, the online marketplace will not be just a more attractive place to buy and sell; it will also be a more attractive place for both “brick and mortar” and online merchants to advertise with relatively low-cost promotions. In the United States, while we expect total ad spend in 2009 to decline by 6% (to $267 billion), we predict online advertising will rise by 9% to $29 billion, accelerating its share gain over conventional advertising as it surpasses 10% of total ad spend for the first time.
- There will be a lot of consolidation of online ad networks. Reflecting both the chilly economic climate and the growing maturity of the online marketplace, we predict a lot of consolidation in 2009 — particularly in the online advertising space: today there are about 400 or so ad networks; in a year’s time, that number will be a lot closer to 200. Among the consolidators will, of course, be Yahoo!, Google, and Microsoft. ValueClick, the biggest independent network, is likely to be an acquiree rather than an acquirer. A lot of the smaller networks will acquire/merge with each other for greater scale.
5. The Telecom Industry — with Growth Cut in Half — Will Consolidate, and Expand, in 2009
As the global recession delivers the same kind of blow to the telecom industry as to the IT industry— with our preliminary revised 2009 growth forecast dropping to 2.9%, down from 2008’s 5.7% — the economic pressure cooker will accelerate consolidation, but also expansion, in the year ahead:
- Look for global consolidation of telecom players, expansion into emerging markets. The capital crisis will further exacerbate consolidation in the telecom sector, stimulating more mergers in all regions. While the industry is already highly concentrated (the top 10 telcos already account for over 75% of the market in most regions), we expect to see further consolidation in North America as second-tier carriers merge to maintain margins by scaling up to join the $1 billion revenue club. See the recent Century Telecom/Embarq announcement, which comes on the heels of similar acquisitions by Level 3 and PaeTec. We also predict large regional providers in EMEA, Asia/Pacific, and Latin America will step up acquisitions activity to solidify their home market positions and expand into key growth markets — particularly in the mobile sector in emerging countries. Companies such as Zain (Middle East), MTN (South Africa), Bharti (India), and Digicel (Caribbean) are moving steadily into new emerging markets, snapping up spectrum and competitors. These companies are oblivious to political upheaval and civil unrest. There is strong demand for mobile service in the absence of reliable wireline infrastructure in many of these emerging countries.
- Telcos will expand aggressively into cloud services. The emerging cloud services delivery model presents a once-in-a-generation opportunity for the telecom industry to accelerate what they’ve attempted do for decades with limited success: diversify into broader business and consumer value-added services, above and beyond increasingly commoditized telephone and Internet access. AT&T has already made a first step, announcing its Synaptic Hosting services, a multitenant utility computing and services suite. Over the next several months, look for announcements from BT, which will deploy a managed computing platform to facilitate SaaS offerings, and from Verizon, which is also working on a “Computing-as-a-Service” platform that will debut in early 2009.
- The leading IT suppliers, including HP, IBM, and Microsoft, are desperately in search of large, dependable channel partners that have reach into the midmarket and below. As the telcos build out their cloud services platforms, it’s certain that we’ll see some very big “cloud” partnership deals announced between these IT players and the service providers — if the telcos can get the diversification strategy, and execution right this time.
- Bad economy = faster displacement of wireline to wireless telecom. One way individuals have chosen to economize in recent years has been to cut the cord: eliminating their traditional wireline telephone service, and choosing to depend solely on their wireless service. Verizon and AT&T posted huge landline losses in the second and third quarters of 2008. IDC predicts the downturn will accelerate this phenomenon in the coming year: in the United States, landline displacement by wireless telephone service will reach or surpass 25% of U.S. population by the end of 2009, up from 16% in early 2008. Since the downturn looks likely to continue all through 2009, so will landline displacement, especially by consumers 35 years of age and below.
6. It Will Be a Grim Year for Mobile Gadgets
As noted above, mobility — in telecommunications services — will be a share-gainer in 2009 as developed economy customers economize through consolidation on wireless, and customers in faster-growing emerging markets come onto the grid as wireless only.
But, when it comes to mobile devices — both network-connected and standalone — 2009 will be a tough year. Overall, IDC predicts spending on consumer electronics and computing will decline in unit terms by 1–5% globally, and revenue will decline by 4–7% globally. Among the challenged device categories will be:
- Mobile phone shipments will be nearly flat. In 2009, we predict worldwide shipments will show near zero growth over 2008’s 1.2 billion total, in spite of good subscriber growth expected in emerging markets. Average selling prices (ASPs) will slide, making 2009 a rather grim year for mobile phone suppliers.
- Notebook PC shipments will grow, but growth will be driven by big price drops. We predict that unit volumes will go up about 20% from 2008 levels, but in large part due to a 12% drop in average price.
- Netbooks — from all major players except Apple — will be a double-edged sword. Netbooks (IDC includes them in a category called mininotebooks) will proliferate from virtually all major players (except Apple), but will prove a double-edged sword for the industry: their low price-points will open up new demand, but they’ll create more downward pressure on notebook pricing and margins (as already-low netbook prices drop another 9% in 2009).
- Portable media player shipments will shrink for the first time. IDC predicts shipments will decline for the first time ever in 2009 — about a 4.5% decline year over year, from 200 million in 2008 to 191 million in 2009 — due to waning demand in saturated markets (in particular the United States and Western Europe) and consumer device budget consciousness, which will slow the rate of first-time purchases and stifle replacement and additional device purchases.
- The portable navigation device market will consolidate. Second-tier PND players such as Magellan and Navigon are likely acquisition targets for CE, PC, and mobile phone vendors that want the capability without building the software expertise in-house themselves. Those two companies are likely to suffer market share losses against larger competitors Garmin and TomTom, which are expected to escalate the price war in the low-end PND segment as economic conditions worsen. Dash, which recently exited the PND device market but will continue to license its connected device platform, is similarly a target.
The silver lining for customers is that — in all of these categories — it will be a year of unprecedented bargains and deal-making.
7. The Crumbling of the “Business/Personal” Wall Will Accelerate (and Create New IT Dinosaurs)
In the IT and telecom industries — as well as in many other industries — there’s growing recognition that what has been a blurring line between individuals’ business and personal lives is almost disappearing. This convergence — not just of technologies but of the user experience — has been driven in recent years by the expanding use of consumer-oriented Web 2.0 tools by employees for both personal and work life. But in 2009, there will be an additional driver: more businesses — as a cost-cutting move in a deteriorating economy — will choose to subsidize employees’ own PCs and mobile/smartphones rather than provide them with dedicated work devices. That is, in 2009, more businesses will not be just tolerating the mingling of work and home IT — they will applaud it.
Therefore IDC predicts that 2009 will be a big year for suppliers to gain competitive advantage with offerings that make that connection between work and personal environments more seamless. Examples of what we expect to see in 2009 as a consequence include:
- Consumer and enterprise “2.0″ software vendors will announce more connections. Salesforce.com’s partnership with Facebook a year ago is a leading example of this trend. In 2009, look for many more “enterprise” software vendors, including IBM/Lotus, to add/expand connections to, and integration with, consumer-oriented social networking software, including Facebook.
- More business IT vendors will develop consumer-oriented businesses. This applies to hardware and software suppliers alike. Our storage research team sees this as a particularly strong trend in their space for 2009. As more people install large amounts of storage in their homes for videos, music, and pictures, they will increasingly turn to the same names for storage in their small businesses: look for more storage players to establish more consumer-friendly storage brands. A recent example is EMC’s launch of Decho, a consumer-oriented cloud storage/information management service.
- Consumer Internet brands will go harder after business customers. Consumer Internet brands — like Google, Amazon, Yahoo!, and Facebook — will make more strategic thrusts into the business computing and communications markets (see the Google/Salesforce prediction in prediction number 3).
- Look for more “dual-mode” devices. Look for more consumer devices (e.g., iPhone) offering better integration with business environments, and business devices (e.g., Blackberry Storm) offering better integration with consumer applications and sites. One variation on this theme: we predict we’ll see more devices that make it simpler to manage dual work/personal environments, such as the recent Nokia E63 handset.
- Desktop virtualization will get a boost. The “subsidizing PCs” move by businesses will further accelerate desktop virtualization efforts, as this is one of the few viable ways to maintain a “standard business desktop” (which will continue to be very important for businesses/CIOs) in a world in which there will be more proliferation of (and convergence of) personal and business access devices.
One important implication of this crumbling wall between business and personal life: the new dinosaurs in IT will be those suppliers that see the personal and business technology worlds as completely separate and can’t (or won’t) bridge those worlds — not just by leveraging the same underlying technologies but also by connecting the customer experiences. Considering that the past 30 years of the IT industry have been built on the premise that most successful suppliers specialize in either business or consumer markets, this convergence presents a profound challenge to most of today’s IT leaders.
8. The Reinvention of Information Access and Analysis in 2009 Will Create a New Leadership Battle
Last year, under the label of “Eureka 2.0,” we wrote about the expanding gap between exploding volumes of digital information and the lagging tools for finding that information and making sense of it. This is an expensive problem, getting worse: IDC estimates that information workers spend 48% of their time searching for and analyzing information, costing organizations $28,000 per worker per year. Searching for the needle in the digital haystack is becoming a bigger problem for consumers as well.
Last year, we predicted the emergence of Eureka 2.0 tools that would solve this information explosion and fragmentation problem. But while adoption of these tools has been strong in some sectors — like voice of the customer and reputation monitoring — enterprise approaches have not yet caught on. However, for the following reasons, we expect 2009 to be a breakthrough year for providing, and driving adoption of, solutions to this critical problem — for businesses and consumers alike:
- There will be much greater pressure to solve the problem. In addition to the growing volumes of consumer information generated by Web 2.0 collaboration tools, the growth in video/audio/image information, and the growing fragmentation of information across the growing number of cloud services, blow-back — in the form of litigation and regulation — from the financial mismanagement that triggered the economic crisis will add greatly to the demand for better information access and analysis tools.
- Major vendors will announce a new generation of “Eureka 2.0″ tools that unify and simplify information access and analysis, igniting the next big IT leadership battle. IDC predicts that in 2009, a new generation of unified access and analysis tools — that simplify customers’ lives by working across all kinds of data and content — will move from early, niche adoption to wide acceptance, backed by large software vendors that are household names, including EMC, Google, HP, IBM, Microsoft, Oracle, SAP, SAS, and SPSS. Information remains the last big unconsolidated portion of the enterprise IT market (after infrastructure and applications) — the stakes are high, and the battle will be fierce.
- Smaller innovators will continue to be snatched up. In 2009, the major suppliers listed above will continue to expand their Eureka 2.0 platforms through acquisition of some of the more innovative small players in this space. Potential acquirees include Attensity, Attivio, BA-Insight, Basis Technology, Brainware, Chiliad, Clarabridge, Connotate, Copper Eye, Coveo, Dieselpoint, Exalead, Expert System, Infovell, InQuira, Jodange, Lexalytics, MarkLogic, Mercado, Metacarta, MuseGlobal, NextIT, NStein, Omniture, Recommind, Schemalogic, Semantra, Silver Creek, Sinequa, Temis, Vivisimo, X1, and ZyLAB.
- Go to market will be increasingly (industry) solution-focused. While the tools and technologies consolidate and simplify, the way they are packaged for customers will also simplify — targeted at very specific information problems, including improving online retail sales, improving call center interactions, making multilingual information accessible, merging information from multiple sources within the enterprise or on the Net, improving customer service, monitoring brand and company reputations, analyzing trends, creating online question answering systems, improving ad matching on the Internet, and categorizing documents and people. We will also see increasing verticalization of these applications in order to improve the accuracy or the results by resolving the ambiguity of the language.
- Machine translation, globalization, and multilingual/cross-language applications and tools will grow. The growth of tools to address one of the information access and integration barriers — language — will be fueled by the need for the industrialized world to move into the emerging economies. Government investment in these technologies for terrorist and fraud detection will also spur new developments that will result in new enterprise and consumer uses as well.
9. Green Technologies Will Have a Good Year — Disguised as “Cost Cutting”
Over the next five years, we expect sustainable/green technologies to be a major vector of growth for the industry. But in 2009, a year of global belt-tightening, we expect the focus to be on technologies that can deliver near-term cost savings. Capital-intensive green investments with longer payback cycles will move down the agenda, temporarily:
- Green IT will be disguised as “cost savings” in 2009. As CIOs plan their IT investments for 2009, IDC predicts that “sustainability” — as an explicit initiative — will temporarily move down the agenda. However, don’t be fooled: green technologies that deliver significant cost savings — such as virtualization software, space- and energy-efficient servers and storage, and cloud services — disguised as “cost-cutting” initiatives, will actually have a good year. Supporting this “green for savings” theme, the EnergyStar standard for servers will be released in early 2009; look for IT vendors to aggressively promote their energy-saving offerings in the second half of 2009. The implication for IT suppliers: keep bringing the green technologies to market, but — marketers — turn up the “cost savings” message.
- Green energy investments will focus on efficiency and energy in 2009. On the energy technologies front, given the continuing growth in peak demand, the long-cycle impact of new investments in alternative energy sources, plus energy efficiency mandates and incentives expected from the Obama administration — the focus in 2009 will be on increasing energy efficiency and conservation. Investment in intelligent grid, smart metering, home area networks, in-home displays, energy storage, and other demand management technologies will accelerate in 2009.
- Emerging markets will be the epicenter of green innovation. Necessity is the mother of invention — and in the emerging markets, an intense necessity for better energy solutions is coming from the intersection of rapidly growing energy demands and limited energy resources. As a result, IDC predicts 2009 to be a year in which we’ll see a much higher likelihood of energy technology breakthroughs and deployments in emerging markets — as those markets offer much-sought-after growth, but require innovative approaches to capture that growth. One intriguing “green” example — at the intersection of IT, telecom, and emerging markets — is last September’s “Green Power for Mobile” initiative, backed by 25 mobile operators in developing countries, primarily in Asia and Africa. The goal is to help mobile operators use alternative and renewable energy sources — such as wind, solar, and biofuels — to power mobile base stations situated off the electricity grid. Look for more such examples in 2009.
10. Government Initiatives in 2009 Will Catalyze Massive IT Investments and Industry Growth
For the first time in many years, many business leaders are virtually begging governments to get more active in ways that will benefit the economy — and the IT industry. As we look toward 2009, IDC sees at least three major areas in which governments, around the world, will take more active leadership roles and foster public/private partnerships that — as a by-product — will drive massive investments in IT:
- Online economic development, training, and innovation zones. In the past two years, a number of governments — particularly in the emerging markets (e.g., China, Vietnam) — have created government-subsidized cloud computing facilities. The goal has been to make it cheaper and easier for students and entrepreneurs to create new products and services, particularly ones designed for the growing cloud services economy. IDC predicts that in 2009, we’ll see governments in the struggling developed economies — including the United States — follow the lead of governments in emerging markets and partner with major IT suppliers and service providers to plan and cofund these large online facilities (and deployment of broadband capacity to access them) as one element of their national infrastructure development and economic recovery plans.
- U.S. health and energy industry restructuring/streamlining. The financial crisis may shift long-needed health industry streamlining and the greening of the energy industry toward the back burner in 2009. But there is little doubt that both are very high on the mid- to long-term agenda of the new U.S. administration. In healthcare, we predict the Obama administration will take more of a lead (as the health industry’s number 1 payer organization) in driving consensus for standards in semantics, policy, and practice for health information exchange. The lack of such standards has been a critical obstacle to industry streamlining, and therefore to the massive investment in IT that will come with the implementation of that streamlining. In the energy sector, we predict a more active government role in encouraging — through investment–oriented tax policy and environmental regulation — investment in IT that supports more efficient and environmentally friendly energy creation, distribution, and usage. Restructuring of the health and energy industries will also be stepped up as priorities in Europe in 2009, with strong implications for IT investments.
- Financial markets’ stability and transparency. Once the crisis phase of the current economic meltdown subsides, businesses and governments alike will shift to the forensic analysis of the meltdown: dissecting how it happened, and developing plans to mitigate such risks in the future. Companies, investors, and regulators will all demand a much more transparent view — in real time — into potentially high-risk financial instruments and into the companies that trade in them and the markets in which they are traded. IDC predicts that in 2009, financial industry regulations will be updated to demand timely and detailed visibility — which will, in turn, drive very large investments in IT, specifically in information management, access/discovery, and analytics.
Putting these trends together, it will be an important year to have (or develop) IT and telecommunications offerings that support these initiatives, and to strengthen government relationships — in developed and emerging markets alike. It is important to understand, of course, that — given the economic crisis — most of the money for these government-catalyzed initiatives will not flow to suppliers in 2009, but in 2010–2012 (and beyond). But IDC predicts that 2009 will be a year in which IT suppliers’ inside track positions for many of these large initiatives may well be established.
In tough economic times requiring lots of belt-tightening and much more selective investment, the natural inclination is to put major transformational initiatives on hold and focus on tactical optimization of the status quo.
But IDC’s predictions for 2009 show that, in this slow IT growth environment, it will be more important than ever for suppliers not to “hunker down” but to more quickly and decisively orient their businesses toward the disruptive customers, offerings, and models that are shaping the next 20 years of the IT industry. This is not just because doing so will better position suppliers for the future; it is for the practical reason that in 2009 these areas of the market — even as they experience significantly slower growth than in 2008 — will actually expand their growth advantages over traditional IT segments as their benefits are magnified in the down economy.
Suppliers that too heavily put on the brakes in their shifts toward emerging markets, small businesses, bridging customers’ personal and business lives, cloud services, mobility, sustainability, and simplifying information access and analysis will not only limit their viability in the long term but miss key growth opportunities in 2009.
To see the rest of our predictions — as well as the dozens of Top 10 Predictions documents we will publish in December and January, each focused on a different segment of the IT industry — visit IDC’s predictions page at www.idc.com/research/predictions09.jsp.