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In making its annual predictions for
the upcoming year, IDC said it expects
worldwide IT spending to grow 6.1 percent
for 2005, a year which will be marked
by "enormous turbulence" and
significant consolidation and realignment
in several key sectors.
The 6.1 percent growth, a slight improvement
over the 5 percent growth rate expected
for 2004, means the IT market will exceed
$1 trillion in overall spending, delivering
about $60 billion worth of net spending
growth, according to IDC executives. The
company expects, however, that growth
in IT spending will continue to be moderate
through 2008.
"This growth has some assumptions
tied to it, namely a modest rise in the
U.S. growth rate, a mild rebound in Western
European countries, the continued weakness
in Japan and Latin America, and continued
high growth in emerging markets like Central
and Eastern Europe and Asia Pacific,"
said Frank Gens, senior vice president
of research at IDC.
In order to gain a higher growth rate,
the industry will need to do a better
job at three things, he said. It must
to target finer-grained growth segments,
deal with an overall environment that
"is all about the convergence of
individual and soiled market segments,"
and aggressively attack cost structures.
What will spur some of this higher growth
will be the migration by larger IT shops
toward more dynamic IT environments, those
that innately offer greater efficiency
and better business responsiveness. Examples
of such environments are embodied in big
picture initiatives such as IBM On Demand
and Hewlett Packard's Adaptive Enterprise.
"This focus on a new foundation
in IT, which we call Dynamic IT but the
vendors call on demand or adaptive, is
about the ability to apply flexible approaches
based on things like SOAs [service-oriented
architectures], Web services, virtualization,
and standard components. It is this technical
foundation underneath the enterprise that
will be the driver for change," Gens
said.
IDC predicted that there would be a
concerted quest for "business value"
that will force an increasing number of
infrastructure players to partner and
acquire technologies and companies that
can help them zoom to the upper stack
of Dynamic IT environments. The firm predicted
that in the next year Microsoft will "make
a big move to increase its upper stack
leverage."
"Microsoft understands that the
leverage within the enterprise is moving
up the stack and getting closer to the
business process. So it needs to strengthen
its position there. We won't speculate
today on whom they might buy, but certainly
within the community of application vendors
and integration platform vendors is where
we believe they will target," Gens
said.
As a side note Gens said he thought
the most "underreported merger that
didn't happen" in 2004 was the proposed
acquisition of SAP by Microsoft. That
deal, probably initiated by Microsoft,
Gens said, would have been "a very
interesting combination to see."
Not only Microsoft, but its archrivals
including IBM, HP, and Sun Microsystems
will continue to buy up companies both
large and small in order to fill out their
respective portfolios that will allow
them to put together a more dynamic infrastructure
platform, IDC executives said.
With little surprise, IDC also predicted
the continued rise of open source software,
including the Linux operating system and
compatible middleware applications. The
idea of those products being free, however,
is a concept that will be on the endangered
species list.
"In 2005 open source will continue
to expand with Linux accounting for more
than 20% of volume server shipments, which
is twice the growth rate of Windows. However,
it is still less than one-third that of
Windows share in volume, but it is now
getting to a very interesting level. We
are seeing a growing number of Linux-friendly
IT strategies among large users, most
notably the Department of Defense,"
Gens said.
Gens added that IDC's research is showing
that users are increasingly moving toward
enterprise-grade Linux distributions,
ones that are paid for. He said the "romantic
notion" of users buying open source
because they do not want to pay for it
is "a bunch of hogwash" and
that in fact there are many other more
compelling reasons why users are moving
to open source environments.
On the hardware side, IDC expects the
market for blade servers to continue to
grow in 2005. Dell’s recent re-entry
into blade serving alone should continue
to provide strong momentum throughout
2005.
"The blade server market will continue
to heat up -- no pun intended -- with
Dell back into it. It will add more legitimacy
as well as force pricing down among more
traditional rack-mount servers,"
Gens said.
In other hardware predictions IDC expects
the high-end computing appliance model
to make another strong comeback, that
storage commoditization would continue
unabated, that HP will aggressively respond
to Dell's encroachment on its imaging
and printing franchise, and that the semiconductor
market will correct and then turn upward
again in late 2005.
In its picks for which emerging technologies
would burn the hottest in 2005, IDC believes
"RFID meeting sensors" will
be the latest development in that market,
mesh networks will take off including
ad hoc and peer-to-per wireless broadband
networks, and there will be further development
of the Semantic Web, a common framework
that allows data to be shared and reused
across applications.
For more information on IDC's predictions
for 2005 readers can go to http://www.idc.com.
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