IT spending growth to slow in 2008

6 Dec 2007

Economic uncertainties and downside risk will dampen IT spending growth in 2008 and it is forecast that worldwide IT market growth will be a moderate 5.5pc to 6pc, compared with 6.9pc in 2007. The exception will be Web 2.0 and new market plays by companies like Google, Apple and Amazon.

According to IDC, IT suppliers will shift their emphasis from established markets to ‘double down’ on fast-growth, emerging markets and small and medium-sized enterprises.

It is also forecast that the IT industry’s market leaders will dramatically increase the migration of core offerings – applications, business intelligence, storage, servers, imaging, printing and so on – to online delivery models. This is viewed as a key method for profitably serving high-growth markets.

Furthering the industry trend toward ‘solutionisation’ of commodity products, server vendors will partner with application vendors to deliver pre-packaged application appliances that simplify customer adoption.

‘Web gadgets’ will further extend the internet, says IDC. Following in the footsteps of Apple’s iTouch and Amazon’s Kindle, a new class of devices will fill the gap between notebook PCs and smart phones. These will radically change the online marketplace, including fuelling the acceleration of location-based services.

It says mobile networks will open up in 2008. Faced with mounting pressure from Web gadgets and open development efforts such as Google’s Android and the Open Handset Alliance, mobile network operators will begrudgingly begin to open up their networks to any device and any application.

As well as this, IDC predicts new software will emerge to tame social networking’s “cacophony of the crowds”. The sudden expansion of social networking will lead to a tsunami of unstructured data.

This will lead to the emergence of ‘Eureka 2.0’ software that combines text analytics, sentiment extraction and related technologies to distil the “wisdom of crowds”.

IDC says that previously considered disruptive technologies like online delivery, community-based development, solution-oriented packaging and other emerging markets which started in the margins found their feet in 2007 with the rise of everything-as-a-service.

These include Web 2.0 applications, open development communities, ‘free IT’ funding models, and the emergence of non-traditional competitors like Google, YouTube and Facebook.

In 2008, IDC predicts that the most important market leaders in the IT marketplace – many of whom have been cautiously dabbling in these disruptive new markets, models, and offerings – will jump in with both feet.

The year will be marked by greatly increased investment in emerging markets, introduction of a raft of new online product and service offerings, the opening up of closed business models to communities, and innovative new approaches to simple, solutions-oriented packaging.

IDC expects there to be so much investment in these disruptive markets, business models and offerings, that they will cease to be considered disruptions – they will become the new status quo for competing in the IT marketplace for the next decade.

By John Kennedy