Which IT suppliers have not yet seen the cliff approaching?

Watching the IT industry at the moment is a little like reading a good crime novel. There are pieces of evidence appearing, from various sources, often apparently unconnected, but which all point to one inescapable conclusion.

The difference in IT is that this is not a question of “Who done it?” but of “Who hasn’t done it?”

One of the recurring themes I’ve been writing about on this blog is the nature of the disruptive change underway in the IT sector, and the notion that the current change is not gradual and evolutionary, but a path to a cliff, and once you’re over that cliff there’s no going back.

It’s the case in the PC market, with Dell and HP bound to the past by inertia and old business models as PC sales suffer record declines.

It’s happening in business too, with retailers like HMV, Comet and Blockbuster failing to spot the dramatic shift to digital.

And another area the cliff is going to appear suddenly in front of a lot of suppliers is the cloud – and here is the latest clue to how this one is going to play out.

This time, research from Morgan Stanley has predicted a dramatic increase in revenue to Amazon Web Services, the web giant’s cloud computing operation.

The firm forecasts that as much as 17% of current IT spending in some technology sectors will move to cloud-based services within five years, with Amazon the primary beneficiary. Morgan Stanley warns that suppliers of server and storage technology are likely to suffer as a result.

The only argument seems to be over just how big AWS will become, and how quickly. According to this article at GigaOm, Morgan Stanley says AWS will reach $24bn in sales by 2022, compared with an estimated $2bn now.

The article also says that Macquarie Capital predicts AWS will hit $38bn revenue in five years, taking up 53% of all cloud spending.

One of my favourite industry commentators, Simon Wardley, has written about a “punctuated equilibrium” where some markets – such as cloud – go through an accelerated, exponential growth, which takes incumbents by surprise.

Wardley has extrapolated Amazon’s growth to suggest it is possible AWS revenue will be the equivalent of 50% of current global server sales in just five years. That’s a big cliff with a long drop for some.

It’s not just Amazon, of course – although the company has a major head start on its rivals.

Google is gaining growing credibility as an enterprise supplier, and while its corporate revenues are relatively small today, there’s every chance they will go through a similar boom in coming years. It will mean IT departments getting used to doing things differently – “We were trying to put a consumer product into a traditional enterprise and we have grown up together,” said an IT leader at Rentokil, an early adopter of Google Apps.

But Google will be a threat in many sectors of corporate IT.  

Commodity open source tools similarly promise to cause a shake-up in business intelligence, information management and data warehousing, as cloud-based big data services disrupt the existing players.

The other difference between IT and a crime novel is that all this is entirely predictable, and you don’t need to read the final page of the book to know what’s going to happen. We’ll find out “who hasn’t done it” when those suppliers fall off the cliff.