Accurately calling industry trends 12 months out is a dicey game many analysts have to face. Some shun it as a marketing ploy, while others take to it like a croc to an ignorant swimming tourist – ruthless and unforgiving.
Although the predictions game starts to heat up at this time of year, we asked IDC communications program manager, David Cannon, a few questions about the analyst firm’s networking prediction form for 2008.
“What we forecast in 2007 for 2008 I think was fairly much on the money,” he said. “We essentially forecasted that the total size of the market would plateau out and over the course of the next couple of years, slightly decline. We did that because of a few things, primarily the Next IP network having been built, Optus’ IP Evolve network having been built, and many other service providers having upgraded their core infrastructure.
“The only one that we didn’t actually see coming was the fairly large investment by AAPT in its network in the last six months in particular. We certainly didn’t expect them to buy as big a box as what they did.”
Cannon said IDC had also flagged a decrease in spending by service providers as they capitalised on recent investments in the networks.
“If you look at Telstra, they expect to be saving $2 billion in OpEx over the next couple of years because of the networks,” Cannon said. “All those networks are bedded down and they can start focusing on the applications and providing some value using the network.
“That’s a very Cisco-oriented mind set, in terms of the network being the application concept and really promoting centralised application delivery. The telcos are moving beyond access and router management to value-added services on top of the pipes being software-as-a-service-type solutions and communications-type solutions.”
However, while 2008 was a relatively solid year for the networks, the financial downturn and the effects it is having on the dollar and wider economy can’t be ignored. There are few analysts who predicted any of that would happen, and Cannon argued it is something the industry will have to contend with as we move into 2009.
“The Australian dollar is going to have an effect on the price of hardware,” he said. “I would say the impact isn’t all encompassing where nothing is selling. The boxes in stock have been bought at the high Australian dollar mark and so the distributors can still push those off and I don’t think there was an over stocking of boxes, so things should be ok.”
In terms of technologies, there were some 2008 standouts across the board.
“You’ve got a lot of very good enhancements from a switching perspective, particularly from Cisco with its silicon chipsets inside the switches,” Cannon said. “You have virtualisation happening within those boxes and that is a real advancement. I don’t think that got as much airplay as what it deserved. Those are real enhancers and a solid demonstration that the networking vendor community is targeting the IT landscape now as their growth space in the market and the reason for refresh to take place.”