More consolidation expected

More consolidation expected

It couldn't have been more than 12 months ago that Gartner outlined some predictions for where the money would be in IT for the next few years. It did get one thing right - its prediction that hardware sales would slow was right on the money. The predicted growth areas, software and services, may have done a little better in the last 12 months, but the optimism driving these industries has also wavered of late.

Creating a strong services capability made IBM one of the few large vendors to hold steady in a shaky market this year. Its example can be seen as one of the reasons for the biggest story in IT this year - the merger of Hewlett-Packard and Compaq. HP desperately wants a services capability that can keep it within reach of Big Blue - but whether the merger will go ahead remains to be seen.

Locally, the IT services market has gone through a period of consolidation, with Hostworks acquiring Interpath Australia last week, Peakhour selling its customer base to Commander Communications and Exodus going broke.

The prediction of a boom market for application service provision has still not eventuated. There are few success stories and some rather large white elephants hiding in the closets of a few major telcos that pinned their future revenue hopes on such a model.

It's not all bad news for managed services, however, with many companies moving into providing managed security or managed storage services. The next 12 months will serve as a litmus test for whether managed services can make significant revenues.

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