IT Spending To Increase In 2013, World Ascends To The Third Platform

December 10, 2012 Jenny Thomas

The overall global financial outlook for 2013 is cause for concern. Many countries in Europe are heading into recession, and in the United States we are driving toward the fiscal cliff that threatens to send us plummeting into a second Great Recession. But lest we believe our financial woes are the only thing that binds our planet together, the folks at IDC say the world is in the middle of a technology shift that occurs only once every 25 years, and they are making some predictions for next year that indicate our addiction to electronic gadgetry is a worldwide phenomenon.

For 2013, IDC foresees worldwide IT spending will exceed $2.1 trillion, which is up 5.7 percent from 2012. Put down your smartphone and take a guess where that increase might be coming from.

It seems fortunate for the IT industry that no matter how dire our finances may be, people will find a way to come up with the dough to get their hands on the latest smartphone or tablet. It doesn’t require a crystal ball to guess the biggest category driving growth in the IT industry will once again be smart mobile devices, which IDC prophesizes will grow by almost 20 percent in 2013 to reach $430 billion dollars and generate nearly 57 percent of the industry’s overall growth.

So if smart mobile devices are saving the IT industry from financial ruin, it’s probably necessary to give them a special category. For the past several years, IDC has kept a watchful eye on the “Third Platform,” which represents mobile computing, cloud services, social networking, and big data analytics technologies all wrapped together. The shift toward the Third Platform, which sounds like some higher form of enlightenment, has been slow and steady, but as we head into 2013, IDC is predicting the transition to the Third Platform will be thrown into high gear as the industry accelerates past the exploration phase and into full-blown, high stakes competition.

“From 2013 through 2020, these technologies will drive around 90 percent of all the growth in the IT market,” said Frank Gens, senior vice president and chief analyst at IDC, during a November 29 webcast, IDC Predictions 2013: Competing on the Third Platform, which you can register to listen to here. Gens says the time for cautious exploration in smart mobile devices is over. “Companies that are not putting 80 percent or more of their competitive energy into this new market will be trapped in the legacy portion of the market, growing even slower than global GDP,” he said.

When IDC takes mobile devices out of the equation, we see a much different story, and while the IT industry still shows growth, the forecast drops to a 2.9 percent increase, which Gens pointed out is remarkably close to the U.S. GDP growth rate of 2.7 percent that was reported at the end of the third quarter of 2012.

Among the other major IT categories, worldwide software spending is expected to grow 6 percent, followed by a 4 percent gain in services in 2013. The server and PC markets, which Gens described as “under duress” in 2012, are also expected to return to modest positive growth in 2013, with a 1.8 percent for increase for server markets and 1.7 percent for PC markets, aided in part by more favorable year-over-year comparisons. “Not a fabulous story, but more of a stabilization story,” Gens said. “There is absolutely no doubt, however, that mobile devices are having, and will continue to have, a cannibalizing effect on PC sales.” Those mobile devices of course need to talk to servers to get their apps, so this helps keep the server market from crashing even as virtualization is driving up server utilization.

On a regional basis, IT spending in emerging markets will grow by 8.8 percent in 2013 to more than $730 billion. While this figure represents 34 percent of all IT spending worldwide, it also represents more than 50 percent of all new growth in the IT marketplace. The BRIC countries (Brazil, Russia, India, and China) will continue to dominate IT spending among the emerging markets. These emerging countries are also important to watch as IDC believes they will start to reshape key global markets because of their oversized share of industry growth.

“We’ll see these markets increasingly, not only generate growth, but influence worldwide design points, pricing, and market leadership,” Gens said. As an example, Gens pointed to China’s ZTE, which is at an astounding 80 percent growth rate, and IDC anticipates will jump from fourth to third position in worldwide smartphone shipments in 2013.

He advised organizations to not only keep an eye out for vendors coming out of emerging markets, but to also think about offerings for those markets as a strategic part of their roadmap in 2013 and beyond.

Gens said the emerging markets, and particularly the BRIC countries, are “generating so much new business, that if you’re successful in these markets, that’s a launch pad for becoming very strong in the developed markets as well.” The vendors who are blossoming in those emerging markets are going to be in position to bring low price points right into the heart of the worldwide market.

While mobile devices are getting the credit as the significant driver of worldwide IT spending, the anywhere, anytime access offered by these devices is also changing consumer behavior, and IDC predicts that by 2015 more U.S. consumers will be using their smart mobile devices rather than their PCs to go online. This trend will be further accelerated by this year’s hottest holiday gift, a.k.a., the mini tablet (which is considered to be a tablet with less than an 8-inch screen size). IDC says this segment will account for as much as 60 percent of the 170 million tablets shipped in 2013, and the big boom will come as more schools shift from textbooks to tablets.

The real battle in 2013, according to Gens, will be the one for developers and apps. To survive, companies like Microsoft and Research In Motion, who are considered by IDC to be toward the bottom of the smart mobile device food chain, will need to capture greater interest from mobile app developers to expand the number of apps that run on devices powered by their respective operating systems, and failure is not an option if either one hopes to survive in this market. Meanwhile, hardware vendors like Samsung will try to get in the game by exploring OS options as a hedge against the growing market dominance of Android.

IBM finally gets a shout out when IDC moves on to make some predictions about the cloud computing market, which it believes will be a powerful contributor to industry developments in 2013. IDC expects to see over $25 billion in acquisitions over the next 20 months as cloud services become the centerpiece of more vendor offerings, and packaged application providers like IBM, Microsoft, and Oracle become more aggressive software as a service (SaaS) providers, pitting these major corporations against SaaS pure players like Salesforce.com and Workday for leadership in some of the major application software markets.

In what perhaps could be good news for IBM, IDC also expects 2013 will see an explosion in industry PaaS (public platform as a service) offerings, which could grow up to ten-fold by 2016. Gens said industry PaaS, which is defined as cloud-based shared services environments tailored to the needs of a specific industry, is some of the most valuable real estate in the cloud, and the PaaS marketplace is going to be where some of the most sought after solutions live. The IBM i platform is certainly a general-purpose platform with excellent applications for specific industries and could eventually be part of the foundation of the SmartCloud Application Services offering from Big Blue, if the company could be encouraged to think beyond X86 servers.

“In 2013, we’re going to see the beginning of a big shift in where the value is going to be in platform as a service, and who the key players will be,” said Gens. (Here’s hoping IBM is listening.)

In the social software market, there will continue to be a lot of pressure on organizations to integrate social media into their corporate culture. Security software vendors and IT shops will start using Facebook, Google, and other social and consumer cloud identity services as a core part of their identity management environment as a means of reaching out to customers, partners, and prospects.

Big data also got a nod from IDC, which it said it expects to grow to nearly $10 billion in 2013. But the focus of this investment will see an important shift in 2013, as more goes toward analytics and discovery tools, and analytic applications. IDC expects predictive analytics will be a particular hot spot in the months to come.

You can see the complete report IDC put together on its predictions for 2013, IDC Predictions 2013: Competing on the Third Platform (Doc #238044), here. For those of us in the IT industry, it’s nice to get report that shows a new road with many opportunities ahead. Now it’s up to us to make the most of it.