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2005... IDC's predictions... don't take them at face value because there are point here that u will agree and disagree with...



IT industry facing a turbulent 2005
IDC predicts blood on the floor as seismic technological shifts rock the status quo
Robert Jaques, vnunet.com 22 Dec 2004
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The IT industry will suffer a period of "enormous turbulence" next year, marked by seismic technological shifts and vendor consolidation as firms including Microsoft look to make major acquisitions.

Analyst firm IDC has predicted that the industry will face a "technological realignment" in 2005.

"Beneath the surface of an almost boringly moderate growth rate of six per cent, 2005 will be a year of enormous turbulence in the IT market with lots of consolidation and realignment in many sectors," said Frank Gens, senior vice president of research at IDC.

According to IDC, companies in the $100bn application market will move away from attempts to develop the 'killer app'.

Instead, applications software vendors like SAP, Oracle and PeopleSoft, and middleware vendors including IBM and BEA, will continue jockeying to define and own "the killer application platform".

"Microsoft, with a foot in each camp, and failing to close a merger with SAP in 2004, is likely to attempt an audacious buy in 2005 to strengthen its hand in this critical battle," said Gens.

He added that systems vendors including IBM, HP, Sun and EMC will continue to buy up companies, large and small, to fill out their software portfolios and create complete infrastructure platforms.

Likewise, independent infrastructure software players like Microsoft, CA and Novell are expected to spend 2005 expanding their offerings through mergers, acquisitions and alliances.

"The interesting questions are whether these two communities, which have depended on each other for success, are headed for a showdown, and whether Dell, which has stayed largely out of the software game, will be forced to follow IBM, HP and the others," said Gens.

In the hardware side of the enterprise IT market, commoditisation with downward pricing pressure will continue to squeeze suppliers.

The growing acceptance of blade servers will put additional downward pressure on the overall server market, while low-cost high-capacity drives will bring about further price erosion in the storage market.

Next year will be marked by VoIP finally entering the mainstream, with an acceleration of high volume cut-over deals by large enterprises, and the large-scale delivery of mainstream consumer offerings announced last year by the incumbent carriers.

Further consolidation in the telecoms industry is described by IDC as "inevitable" in 2005.

The analyst predicts that telcos and cable companies will continue their battle for dominance in the consumer market with the introduction of "grand slam" offerings that bundle wireless voice with "triple play" bundles of fixed voice, broadband and cable TV.

IDC expects the consumer space to continue to be dominated by the latest digital devices, with ever improving handheld game consoles, hard-disk MP3 players and digital cameras leading the market. Broadband adoption will also make further gains as price points fall further.

The analyst said that its prediction of moderate six per cent worldwide growth in IT spending assumes improving IT growth in the US, modest improvement in Western Europe, strong growth in the emerging IT economies of Central and Eastern Europe, China and India, and growth struggles in Japan and Latin America.

Of these assumptions, European recovery is deemed to have the greatest downside risk, according to the analyst.

In the IT/business services sector, IDC expects offshoring to increase across many areas as the industry races to lower its cost structure and improve efficient.


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saffy