IDC had their Top Ten Predictions Conference Call for 2008 today. I listened in.
Their overall theme was Same Disruptions, Driving New Developments...meaning that most of their predictions are extensions of predictions of disrupters they've been making over the past few years, but they expect some significant new developments.
Four major sub-themes running through the whole conference call
- Strategic pursuit of emerging markets as companies search for growth outside traditional markets
- Offerings increasingly designed to leverage the Internet to increase a companies reach within and outside traditional markets
- We'll see a focus on community-driven value creation for scale, scope & speed
- “Solutionization” – allows for rapid adoption in the marketplace...and hopeful avoidance of commoditization.
IDC is predicting that in 2008, leading IT industry players will make significant investments designed to substantially rebuild their core businesses or to find new business outside their core. IDC says that those IT industry players that don't invest now will begin to see their market share decline.
Here is a rundown of the IDC's top ten predictions, along with some of my notes from the conference call.
- IT Spending Growth Will Be Lower. IDC says worldwide IT market growth in 2008 will be lower, at a moderate 5.5-6% worldwide, caused mainly by downside risk building from worsening U.S. economic forecasts. IDC says the US economy could be hit hard causing IT spending could drop to 3-4%. Hardware will feel the impact first, followed a quarter or to later by Software The Services impact is expected to be more gradual.
- Doubling Down” on Emerging Markets.
- Emerging Countries. IDC expects a big focus on emerging countries as IT players look for revenues to fill the gap caused by the economic conditions in the major developed countries. Expect IT vendors to accelerate investments in the hyper-growth “BRIC+9” economies (“+9” includes Mexico, Poland and Turkey, followed by the smaller Argentina, Colombia, Saudi Arabia, Thailand, United Arab Emirates, and Vietnam). IDC sees these economies collectively growing at 16%.
- SMB. IDC says that SMB initiatives will also accelerate (haven't they been accelerating for years now? SMB seems to be on everyone's list .. every year), with spending growing at 8-10%. IDC also says they expect some consumer players will partner with major IT Industry leaders (Microsoft, HP, IBM)
- Market Makers (& Ecosystems) Jump Feet-First Into “Everything-as-a-Service”.
- IDC expects IBM and Microsoft both to move strongly into Software-as-a-Service. Don't be surprised if Cisco and Google also announce plays.
- Emerging segments in SaaS include 1) Web 2.0 Data Center-as-a-Service, 2) Storage-as-a-Service, and 3) BI-as-a-Service.
- IDC also says to watch developments in channels. As traditional IT product and services ecosystems shift online, we will see new tools and new players...and thus an entirely new ecosystem.
- “Application Appliances” Go Mainstream. IDC is expecting that some leading server vendors will (with business application vendors and pure-play SaaS vendors - create pre-packaged, Web-connected “business application appliances". These will be built around the virtualization movement and will appeal to SMB customers. This “solutionization” is a key strategy for commodity IT product suppliers to add value, de-commoditize their business.
- A Flood of “Web Gadgets” Extend the (Mobile) Internet. IDC expects mobility to be a major movement in 2008 as new devices filling the gap between notebook PCs and smartphones get announced. IDC says to watch companies like Asus, Qisda (BenQ), Compal, Electrobit, as well as Microsoft, Apple, and other smartphone suppliers. Intel will also be a driving force.
- All Mobile Network Operators Will Join the Open Internet. As we just saw with the Verizon announcement, IDC is expecting that virtually all major mobile network operator networks will - slowly and begrudgingly – open up their networks to any devices and any applications. IDC says this is very similar to “AOL vs. the Web” debate we had in the late 90's. In 2008, the driving forces for this trend will be all the new Web Gadgets, a new iPhone, and the work the Open Handset Alliance is doing. IDC also says the in this environment, MNO's will will need to completely re-think their business.
- Social Networking Cacophony Will Drive “Eureka 2.0” Software, Sites. IDC expects the Web 2.0 phenomena to continue to accelerate, creating an avalanche of user-generated digital content. As this continues, IDC says we will see new game changing software and services arrive to the market. Emerging software and services will utilize technologies like text analytics, sentiment extraction and semantic search to distill real insights from all the digital content that is being created. In addition, IDC also says that they expect Content Distribution Networks will grow by at least 30% in 2008, drawing in a parade of new players – including telcos, such as AT&T - to challenge leaders Akamai and Limelight Networks.
- Key Players Will Morph Themselves. IDC says that when disruption occurs, it makes it easier to change. But the key thing is to realize you need to change. Traditional IT vendors can use this tie to move beyond their old, narrow identities and offerings. IDC expects IT vendors to add a wide range of business (and consumer) services on top of their IT offerings. IDC also predicts that certain consumer-focused players (like Google, eBay, Yahoo, Apple and Cable MSOs) will accelerate investments, offerings up into SMBs. And on the flip side, some traditional enterprise IT players (e.g., IBM) may rethink the need to be in certain Consumer markets.
- “Two-Minute Drill”. Every year IDC end sup with a prediction called Two Minute Drill where where they throw in other important predictions into one....just so they can end up with a list of 10, instead of 12, 13, or 14. This year they covered three areas.
- Expect U.S. Telecom operators to promote consumer VOIP in an attempt to win back share from the Cable MSOs
- It will be a big year for Location-Based Services. Web Gadgets (as discussed above) join the 15-18% of GPS-enabled phones in an explosion of mobile Internet devices.
- Green IT will be big. Major driver will be the advantages in operating costs.
- Key Acquisition Candidates. IDC used this prediction to list a number of potential M&A activities that they feel will happen in 2008
- Intuit – its SMB and SaaS capabilities are coveted
- BRIC ISVs – critical capabilities in hyper-growth markets
- Salesforce.com, Bluewolf and Astadia – well-positioned in the “everything online” marketplace (see number 3 above)
- Attenex, Attensity, Biz360, Connexor, Lexalytics, Recommind, et al. – positioned for “Eureka 2.0” as discussed in number 7 above.
- TeleNav and Networks in Motion – mobile app platforms are the next step in LBS consolidation
So there you have a summary of IDC's list of Top Ten Predictions for 2008. You can read IDC's press release here. IDC's predictions for 2008 are discussed in greater detail in the report, IDC Predictions 2008: The Hyper-Disrupted IT Industry Takes Root (Doc #209776). IDC will also be coming out with many other prediction reports for 2008 in the individual markets that they cover. I'll be watching for those...and you can to at IDC's website