News

IDC Directions: The Future is Here, Vendors Now Need to Act

• By Kathleen Ohlson
• March 29, 2005

The implosion is over, the future is here, now what are vendors going to do about it?

That was the question asked of 900 attendees, mostly vendors, at this year's recent IDC Directions 2005 Conference in Boston.

After a period of "irrational exuberance" with the advent of the Internet explosion, companies are in the process of a "long steady period of growth" that will be assimilated before the next boom, IDC's John Gantz says. Vendors, though, must find the best balance between their short-term and long-term decisions.

According to Consensus Economics, North America will have a 3.1 percent GDP growth in 2005, followed by Western Europe (1.7 percent) and Japan (1.1 percent), but the bulk of the GDP growth will come from emerging countries, such as China, India and Russia, growing by 5.8 percent.

IDC expects emerging countries to take the lead in IT spending for 2005 with 9.3 percent, followed by the U.S. and Western Europe (5.6 percent each) and Japan (2.2 percent). Worldwide IT spending will grow 6 percent in 2005.

Of course, this potential growth and IT spending could be all for naught, Gantz says. "There's a high probability of a low probability of an event taking place." Events, such as the current price spike in oil and the value of the U.S. dollar dropping, could stifle potential growth.

Gantz says the biggest story in IT and the worldwide economy will be China. Its industrial output has already surpassed the U.K., and it will blow by Germany soon and Japan by 2016. Chinese citizens currently own more TVs and cell phones and use more oil than Americans. "IT demand and financial power is moving to the West," he says.

The growth of mobile devices will play a huge part of the impending boom, according to IDC. There are currently 1 billion mobile devices, which will grow to more than 5 billion devices in the next 10 years.

Broadband will also increase Internet usage, totaling 600 million users by 2015. Gantz says the increase will lead to more vendors in the market as Verizon and other phone companies will encroach on cable and TV providers.

Telephony, specifically VoIP and IP, will change how users make calls, Gantz says. For example, cameras will be able to make calls and take calls, or users will be able to audibly instruct their TVs.

XM, Sirius Satellite Radio and the advent of digital radio will also shape the IT industry. Interest in digital radio increased when shock jock Howard Stern announced he would leave conventional radio for Sirius beginning Jan. 1, 2006.

"You can talk to [Howard Stern] from the phone or the radio, you'll get abused either way," Gantz says.

With all of these impending technology advances, Gantz warned vendors to watch out for "blind alleys." The IT industry is gearing up for an embedded boom and vendors need to "change on a dime for the next boom or bust," balancing research and investment opportunities with a fast time to market.