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IDC 2001 - a directional odyssey

IDC 2001 - a directional odyssey

A wireless strategy will be a competitive necessity in the IT industry of the future and channel partners will be the key to implementing the diverse solutions required by users, according to industry research firm IDC.

The claims were made by PC analyst Logan Ringland during a hardware markets presentation at the international IT research company's annual IT industry briefing, which assessed last year's results and made forecasts for the future.

Aptly titled Directions 2001, given the uncertain IT market, the majority of analysts at the briefing conceded 2001 would continue to be a difficult year. But while the PC market will continue to cop a beating for a little while yet, it is not all doom and gloom. 2002 looks set to be a vast improvement, as enterprise moves back into the replacement cycle and new technologies drive the market.

IDC foresees extreme growth in the personal appliances market, which could prove the saviour of PC assemblers, resellers and retailers. Of course it will be the big global brands that will influence the market, but there are huge opportunities for new players to emerge with popular appliances.

"There is a train of thought that the PC industry will come down to three or four organisations," Ringland said. "That is not necessarily true. Personal appliances offer lots of opportunities for PC companies."

An IDC survey of handheld device end users found that information systems departments were increasingly looking to buy handhelds for their employees.

"In the past, companies have been loathe to purchase these products," Ringland said, adding that "key to all this will be the channel".

"[Vendors] have got to leverage their channel partners as they know the customers and have significant influence in the purchasing community."

Notebook sales will also continue to grow, thanks to the increasing availability and affordability of LCDs and other components, while wireless LAN will free people from their desktop shackles.

"This will really drive mobility," Ringland said. "A couple of years ago, notebooks accounted for 14 per cent of PC sales. Last year it was 18 per cent. There is a changing dynamic in the market. Although it is quite soft at the moment, we are likely to see it rebound quite strongly."

According to Ringland, networking will also continue to grow, driven by demand from small business and homes, and the server market will go along for the ride.

"Increasing traffic will demand a new era of servers in areas such as Web hosting, so we may see the number of low-cost racks increasing over the next five years."

This increase heralds the rise of the Appliance Era in the PC market, where component expertise and the degree of modularity will both influence purchasing decisions.

"With appliances, simplicity is the key, but it is what it delivers that counts. Companies can't afford to over-deliver on the technology or someone will come from below you," Ringland warned.

He also claimed the industry will also see the rise of Blades - self-integrated servers that are taking on router technology and form factor. Their vertical, blade-like design allows users to maximise the number of CPUs per rack.

Meanwhile, according to mobile communications analyst Emilia Wasiak, the next phase of growth in the communications industry will come from the wireless market segment.

"Last year, the number of mobile Internet users was very small compared to the number of wireless users - 8 million versus around 100,000 - but we expect the number of wireless users to reach 9 million in 2005."

The main market accelerators at the enterprise level will be the ability to access the Internet at different locations, content, technology and vertical segments.

IDC predicts by 2004, mobile commerce, or m-commerce, will be a $1.6 billion industry in Australia. However, this is still a fraction of total Internet commerce.

"There are lots of players trying to make the value channel work effectively for them. They think they can gain more share if they work in more layers of the market, and it is holding back mobile commerce. We need collaboration, or else we will see the battle continuing and it will inhibit the growth of the industry."

Don't be device or carrier-centric, Wasiak advises, and know that the mobile Internet is different to the wired Internet but it is still part of a whole. He also suggests that resellers bear in mind that the limitations of the devices currently on the market will be sorted out eventually.

"Commerce, content and the customer. That's where the focus of the service provider should be."

But, thankfully, talk of the "new economy versus the old economy" has finally been laid to rest, according to Joel Martin, an IDC research manager.

Martin subscribes to the same theory that many pragmatic pundits have espoused since the beginning of the Internet generation - there is simply one single economy. According to Martin, technological change to business is not the bottom line, it's merely the tools used to affect the bottom line.

Martin predicts service revenues will exceed hardware and software revenues by 2003, reaching a value of $12 billion in Australia.


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