IDC Forecast: Data Management, Security Will Drive Limited IT Growth In 2010

"It's the best of times, and the worst of times," said IDC's John Gantz, speaking at the conference's traditional look-ahead keynote on Tuesday. "I'll say we've never been here before because we're in a technology renaissance at the same time we just went through the worst economic downturn since the second World War."

Most gloomy predictions in fall 2008, Gantz noted, still fell short of the much colder reality of the recession, which IDC says bottomed out about March or April 2009.

"A year ago, we didn't realize how bad it was going to be," he said. "The forecasts were much more optimistic compared to what happened. But the global forecast for 2010 has been steady now for nine months. That gives you some hope that maybe we'll rebound."

Gantz offered attendees -- including analysts, distributors, vendor executives, integrators and solution providers -- an avalanche of data to help them grapple with the "new normal" of IT spending.

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The worldwide spending forecast for IT over the next two years, he said, is on the same trajectory as the broader economy, with growth projected to be 5.5 percent by 2011 and 5.6 percent by 2012. Gantz said that since 2006 or so, the IT market as a whole had lost about $758 billion in value.

Most every technology category would be up in 2010 over 2009, he said, with the exception of servers, the lone category IDC predicts won't see positive growth. PCs will be up, storage will be up, networking will be up and software and services will both be significant up.

Of aggregate, "net new" IT spending between 2010 and 2013, about $159 billion will be in the U.S., and $184 billion would be in Asia, excluding Japan.

The most growth in net new spending by geography, said Gantz, will be in emerging markets, and 54 percent of the overall new opportunity would come from 22 percent of the total world market.

Gantz urged attendees to view the crisis as detrimental to the economy, but also as a catalyst for technology growth. In 2010 he said, IT staffing levels in most enterprises would remain about flat compared to 2009, but the number of servers would grow by a factor of 1.9, nearly doubling, with virtualization helping lead the way.

The more dramatic growth would come in mobile use, Gantz said. In 2010, the number of mobile technology users will triple, he said, and use of nontraditional devices -- sensors, RFID, surveillance cameras, medical technologies and things of that nature -- would grow by a factor of 3.6.

The overall amount of information available to technology users would grow by a factor of 5.1 next year, and the number of "user interactions" per day -- users interacting with applications and technology platforms -- would grow by a factor of 8.4.

What does that mean for technology providers? Virtualization and other data management and data security solutions will thrive.

"With all that data, any software that manages anything is in one of the relatively high growth categories," Gantz said. "Two thirds of new growth are in high growth categories like wireless data, smart handhelds, application software and hosted infrastructure services. How do we manage all that data. How do we deal with all that information."

Gantz also offered what he described as "inflection points" for understanding IT in 2010. According to IDC, 2010 will see 1 billion mobile Internet users for the first time, and also 500,000 mobile phone applications, setting up, said Gantz, a "developer war like you've never seen."

"Android is very distantly following the iPhone right now, but there will be some very interesting developments around the Google Android [platform] in the next 12 months," he offered.

Gantz said 470 million 3G phones would ship in 2010 -- representing a 97 percent year-over-year increase from 2009 -- and that 160,000 4G phones would ship, marking the beginning of "the 4G hype cycle."

New advertising models would also come to the fore, Gantz argued, with IDC predicting $70 billion in Internet advertising revenue in 2010. That number would represent 12 percent of all advertising next year -- the first time Internet advertising crosses the 10 percent mark if IDC is correct.

Among other data points to keep an eye on, Gantz said, is that IDC projects 700 million social networking users -- with the pace of social networking tool adoption doubling.

It'll also be a "better year" for PCs, with IDC projecting 300 million PCs to ship in 2010, 40 million of which will be netbooks.

"We'll be back on double digit unit growth for PCs," Gantz said. "We think netbook ASPs will go up, too, and we'll see more fully featured netbooks."

The federal stimulus wouldn't be the boon to IT many saw it as -- unless you're a solution provider dealing in smart meters and energy concerns, or electronic medical records, Gantz said.

Finally, said Gantz, the emergence of cloud computing opportunities would spur significant M&A activity around cloud companies.

"Big companies will buy smaller hosting firms to round out public or private cloud offerings," Gantz said. "They'll be companies like Rackspace and plenty of smaller companies you've never heard of."

IDC doesn't predict any major IT M&A activity beyond "one or two major acquisitions," Gantz suggested.

"IBM might buy a Juniper or something and get back into the network hardware business," he said. "We're really not expecting much from the EMCs and Ciscos though. And the Cisco-EMC thing, it's not a marriage. It's just a relationship."

Remember one thing, said Gantz.

"It's going to be a better year. The probability of disaster is still there but it's lower than it was last year. But like I tell my analysts: each year there's a high probability of a low probability event taking place. Remember that."