juanjo tugores - Fotolia

'We have not been pessimistic enough' - expert tells UK IT suppliers

The IT market will continue to shrink for at least the next two years, and may only recover in 2013, according to a UK market analyst.

The IT market will continue to shrink for at least the next two years, and may only recover in 2013, according to a specialist UK market analyst.

TechmarketView managing partner Anthony Miller (pictured) said the firm had produced downbeat predictions before. "We have not been pessimistic enough," he told delegates to the annual Intellect Regent conference in London.

Anthony Miller said the market had shrunk 5% in real terms, and would continue to decline for two years. He expected the IT market to grow at below the GDP rate, despite huge sales of end user devices, especially mobile ones.

David Callaghan, the trade association's president-elect, told Computer Weekly growth would be the cornerstone of his term. He said bright spots were services and storage underpinned by the "megatrends" of cloud and mobile computing. But he would not be drawn on profitability, which is under pressure.

Miller agreed cloud and mobile would provide opportunities, but warned profit growth would lag behind GDP growth because of Moore's Law.

Miller was optimistic about cloud computing. "We see cloud as a journey," he said, predicting a 26% compound annual growth rate for the sector. Private clouds would make up by far most of the market, which he expected to be worth £6bn by 2014.

He said customers would turn to specialists in infrastructure, applications and business processes to design, supply, build, run and support solutions to implement cloud-based systems. The winners would be those who adapted their business models the quickest, Miller said.

Salesforce.com and former BT chief scientist JP Rangaswami cautioned that, for young consumers, "no part of their identity is tied to landlines".

"Forget papers and statistics," he said, "if you want to know where the market is going, watch the kids."

Rangaswami questioned whether network operators could continue to ransom bandwidth. He said the almost hysterical debate over net neutrality, fanned by mobile network operators, was already yesterday's problem.

"There is evidence that mobile traffic is decreasing because kids are switching to WiFi," he said. "It's the iPad vs the data plan."

He noted that Apple does not disclose sales of its 3G iPad. He believed this was because they were unexpectedly low compared to sales of the WiFi version, which were unexpectedly high.

Another indication of difference was the idea that a £4 ringtone was better value than a £10 CD. Kids' values were very different (to their parents') and ignoring the differences either in the office or the shop would spell trouble, he said.

Rangaswami said young people were "creating a directory of the world" with the technology. The mobile user interface and underlying apps made it easy for them to produce video, to create, index and search content, and to provide real-time feedback on what they were experiencing.

"Youth is intolerant of that which older people will put up with," he said. "Simplicity will be a critical part of the future, and kids will signal what to do next."



Read more on E-commerce technology