IDC Sees ”Post-Disruption” Marketplace Taking Hold in 2008

FRAMINGHAM, MA – December 6, 2007 – Over the past several years, the IT market has been reshaped by a handful of key disruptions – online delivery, community-based development, solution-oriented packaging, and emerging markets. These disruptions, which started at the margins, gained momentum in 2007 with the rise of everything-as-a-service, Web 2.0 applications, open development communities, "free IT" funding models, and the emergence of non-traditional competitors like Google, YouTube, and Facebook. These developments set the stage for what IDC believes will become the Post-Disruption Marketplace.

In 2008, IDC predicts that the most important market leaders in the IT marketplace – many of whom have been cautiously dabbling in these disruptive new markets, models, and offerings – will jump in with both feet. The year will be marked by greatly increased investment in emerging markets, introduction of a raft of new online product and service offerings, the opening-up of closed business models to communities, and innovative new approaches to simple, solutions-oriented packaging. IDC expects there to be so much investment in these disruptive markets, business models, and offerings, that they will cease to be considered disruptions – they will become the new status quo for competing in the IT marketplace for the next decade.

"Disruptive technologies have been a persistent theme in IDC's predictions over the past several years," said Frank Gens, senior vice president of Research at IDC. "These technologies have been creeping into everything from enterprise software and hardware to consumer gadgets and telecom services, forcing vendors to rethink their offerings. In 2008, the era of experimentation will end as industry leaders get serious about transforming their products and services to take advantage of – and meet the challenges posed by – these new technologies and business models. The status quo is about to change."

As the IT industry accelerates into the Post-Disruption Marketplace, IDC offers the following predictions for 2008:

* Worldwide IT spending will grow at a slower pace in 2008. Economic uncertainties and downside risk will dampen IT spending growth in the U.S. and elsewhere. As a result, worldwide IT market growth will be a moderate 5.5-6.0%, down from 6.9% in 2007.

* IT Suppliers Will "Double Down" on Fast-Growth, Emerging Markets and SMBs. Vendors will increase their focus on the "BRIC+9" countries (Brazil, Russia, India, and China plus the next nine important emerging markets), where IT spending growth will remain strong. The SMB sector will get similar attention as suppliers seek out additional pockets of spending.

* Market Leaders Embrace Online Delivery Models. The IT industry's market leaders will dramatically increase the migration of core offerings – applications, business intelligence, servers, storage, imaging, printing, etc. – to online delivery models as a key method for profitably serving high-growth markets, particularly SMBs.

* Application Appliances Will Go Mainstream. Furthering the industry trend toward "solutionization" of commodity products, server vendors will partner with application vendors to deliver pre-packaged application appliances that simplify customer adoption.

* "Web Gadgets" Will Further Extend the Internet. Following in the footsteps of Apple's iTouch and Amazon's Kindle, a new class of devices will fill the gap between notebook PCs and smartphones. These will radically change the online marketplace, including fueling the acceleration of location-based services.

* Mobile Networks Will Open Up. Faced with mounting pressure from Web gadgets and open development efforts such as Google's Android and the Open Handset Alliance, mobile network operators will begrudgingly begin to open up their networks to any device and any application.

* Software Will Emerge to Tame Social Networking's "Cacophony of the Crowds." The sudden expansion of social networking will lead to a tsunami of unstructured data. This will lead to the emergence of "Eureka 2.0" software that combines text analytics, sentiment extraction, and related technologies to distill the "wisdom of crowds."

Alongside these developments, we'll see more active marketing of Consumer VoIP by U.S. telcos, and a continuing surge in Green IT that moves market shares as corporations focus on the "greenness" of IT purchases and operations. Finally, the long-running trend of Industry Mergers and Acquisitions will continue unabated as companies seek market share and/or competitive advantage.

"One of the more profound consequences that will come out of this era of hyper-disruption is the opportunity – and for some, the critical need – for IT suppliers to move beyond their old, narrow identities and offerings," noted Gens. "As the industry's leaders set about to substantially rebuild their core businesses on disruptive models and principles, they will find that these efforts will redefine their identity as well as their customer base."

IDC's predictions for 2008 are discussed in greater detail in the report, IDC Predictions 2008: The Hyper-Disrupted IT Industry Takes Root (Doc #209776). In addition, Frank Gens will lead a group discussion of this year's predictions in an IDC Telebriefing scheduled for December 6 at 12:00 pm U.S. Eastern time. To register for this event, please go to http://www.idc.com/getdoc.jsp?containerId=IDC_P16465 .

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 900 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 90 countries worldwide. For more than 43 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com .

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