In making its annual predictions for the upcoming year,
IDC said it expects worldwide IT spending to grow 6.1% for 2005, a
year which will be marked by "enormous turbulence" and significant
consolidation and realignment in several key sectors.
The 6.1% growth, a slight improvement over the 5% growth rate
expected for 2004, means the IT market will exceed $1trillion
(£516bn) in overall spending, delivering about $60bn worth of net
spending growth, according to IDC executives.
The company expects, however, that growth in IT spending will
continue to be moderate through 2008.
"This growth has some assumptions tied to it, namely a modest
rise in the US growth rate, a mild rebound in Western European
countries, the continued weakness in Japan and Latin America, and
continued high growth in emerging markets like Central and Eastern
Europe and Asia Pacific," said Frank Gens, senior vice-president of
research at IDC.
In order to gain a higher growth rate, the industry will need to
do a better job at three things, he said. It has to target
finer-grained growth segments, it has to deal with an overall
environment that "is all about the convergence of individual and
soiled market segments", and it must aggressively attack cost
structures.
What will spur some of this higher growth will be the migration
by larger IT shops toward more dynamic IT environments, those that
innately offer greater efficiency and better business
responsiveness. Examples of such environments are embodied in big
picture initiatives such as IBM's On Demand and Hewlett Packard's
Adaptive Enterprise.
"This focus on a new foundation in IT, which we call Dynamic IT
but the suppliers call on demand or adaptive, is about the ability
to apply flexible approaches based on things like SOAs
(service-oriented architectures), web services, virtualisation, and
standard components. It is this technical foundation underneath the
enterprise that will be the driver for change," Gens said.
IDC predicted that there would be a concerted quest for
"business value" that will force an increasing number of
infrastructure players to partner and acquire technologies and
companies that can help them zoom to the upper stack of Dynamic IT
environments. The firm predicted that in the next year Microsoft
will "make a big move to increase its upper stack leverage".
"Microsoft understands that the leverage within the enterprise
is moving up the stack and getting closer to the business process.
So it needs to strengthen its position there. We won't speculate
today on who they might buy, but certainly within the community of
application suppliers and integration platform suppliers is where
we believe they will target," Gens said.
As a side note Gens said he thought the most "underreported
merger that didn't happen" in 2004 was the proposed acquisition of
SAP by Microsoft. That deal, probably initiated by Microsoft, Gens
said, would have been "a very interesting combination to see".
Not only Microsoft, but its rivals including IBM, HP, and Sun
Microsystems will continue to buy up companies both large and small
in order to fill out their respective portfolios that will allow
them to put together a more dynamic infrastructure platform, IDC
executives said.
With little surprise, IDC also predicted the continued rise of
open-source software, including the Linux operating system and
compatible middleware applications. The idea of those products
being free, however, is a concept that will be on the endangered
species list.
"In 2005 open source will continue to expand with Linux
accounting for more than 20% of volume server shipments, which is
twice the growth rate of Windows. However, it is still less than
one third that of Windows share in volume, but it is now getting to
a very interesting level. We are seeing a growing number of
Linux-friendly IT strategies among large users, most notably the
Department of Defense," Gens said.
Gens added that IDC's research is showing that users are
increasingly moving toward enterprise-grade Linux distributions,
ones that are paid for. He said the "romantic notion" of users
buying open source because they do not want to pay for it is "a
bunch of hogwash" and that in fact there are many other more
compelling reasons why users are moving to open-source
environments.
On the hardware side, IDC expects the market for blade servers
to continue to grow in 2005. Dell's recent reentry into blade
serving alone should continue to provide strong momentum throughout
2005.
"The blade server market will continue to heat up - no pun
intended - with Dell back into it. It will add more legitimacy as
well as force pricing down among more traditional rack-mount
servers," Gens said.
In other hardware predictions IDC expects the high-end computing
appliance model to make another strong comeback, that storage
commoditisation would continue unabated, that HP will aggressively
respond to Dell's encroachment on its imaging and printing
franchise, and that the semiconductor market will correct and then
turn upward again in late 2005.
In its picks for which emerging technologies would burn the
hottest in 2005, IDC believes "RFID meeting sensors" will be the
latest development in that market, mesh networks will take off
including ad hoc and P2P wireless broadband networks, and there
will be further development of the Semantic Web, a common framework
that allows data to be shared and reused across applications.
For more information on IDC's predictions for 2005 users can go
to
http://www.idc.predictions2005.
Ed Scannell writes for Infoworld