Moderate growth masks turbulent 2005 for tech market
Moderate growth masks turbulent 2005 for tech market
Dec 6, 2004: While 2004 has been the year of the tech resurrection, with a return to positive IT spending growth, 2005 is expected to be the year of tech realignment, with a flurry of activity expected across most sectors in the coming 12 months.
According to Frank Gens, senior vice president of research at IDC: "Beneath the surface of an almost boringly moderate growth rate of 6 percent, 2005 will be a year of enormous turbulence in the IT market with lots of consolidation and realignment in many sectors.”
IDC believes that such modest growth in IT spending will keep the pressure on IT suppliers to cut costs, target better-than-average-growth customer segments, and deliver higher-value solutions.
At the enterprise level, businesses' migration to a dynamic IT environment – with greater IT efficiency and better business responsiveness – will continue to drive IT investment in major segments such as the enterprise hardware market, where commoditisation will force prices down and put the squeeze on suppliers. The growing acceptance of blade servers will add to the downward pressure on the overall server market.
In the infrastructure software market, systems vendors such as IBM, HP, Sun and EMC will continue to broaden their software portfolios through acquisition, while in the application market, Microsoft, after failing to close a merger with SAP in 2004, "is likely to attempt an audacious buy in 2005," according to Gens.
Similarly, the highly-fragmented data and information management software industry will spend 2005 restructuring, with companies like IBM, Oracle, Microsoft, Software AG, Open Text, EMC/Documentum, Informatica, Ascential and others driving consolidation to address businesses’ enormous information access problems.
Meanwhile, in the IT/Business Services sector, IDC expects offshoring to increase across a number of areas as the industry races to lower its cost structure and improve its efficiency. At the same time, emphasis on offering greater business value to customers will produce a renewed focus on business process outsourcing.
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