What CEOs Say

In addition, technology will continue to improve, networks will get smarter, all sorts of devices will become more useful for accessing enterprise data, and information will be easier to link to and find, according to CEOs speaking at last month's Gartner Symposium ITxpo conference in Orlando, Fla. The CEOs were interviewed by analysts before an audience of approximately 5,000 enterprise customers.

"The unique thing about technology is that it does not recognize economic recessions," says Craig Barrett, Intel's CEO. That may be true. But the lack of any hot new trends in computing is disconcerting for many solution providers and customers. A large population has become accustomed to the technology shifts of the past two decades,but that has given way to making existing systems and networks more useful.

Clearly, making devices more user-oriented is an admirable goal. But innovation needs to become a priority if the IT industry hopes to survive this downturn.

"There is no killer app that will appear in 2003 that's going to radically stimulate demand," says Gartner Group CEO Michael Fleisher.

Of course, real innovation doesn't come from demand. In fact, the opposite is true: Demand is stimulated by innovation. The question is, what breakthroughs will spark demand? While that remains to be seen, don't underestimate the improvements in existing technologies. Gartner predicts significant near-term improvements in the price and performance of computing and bandwidth. By 2008, a typical PC will have a 40-GHz processor, more than a terabyte of local storage and multiple gigabytes of RAM, according to Carl Claunch, Gartner vice president and director of research.

On the software side, solution providers will see a move toward the "interconnected enterprise" during the next five years. Also, the ability to determine presence as a foundation in corporate applications and business-activity monitoring, allowing executives to get real-time views of information that affects the business, will be key.

Mobile Innovations Spur Growth

Mobile systems and applications will continue to pour into the market, and there will be consistent growth in CPU, memory, storage and bandwidth capabilities, according to Claunch. And Barrett agrees there will be an increase in business: "I don't see any slowing down in the near term or the next five- to 10-year period...Moore's Law has been around for 35 years, and it's good for another 15 years or so." (Moore's Law refers to the doubling of transistor density on a manufactured die every year to 18 months, and is a term coined by Intel's chairman emeritus Gordon Moore back in 1965.)

But Barrett has to worry about something even closer to home than Moore's Law. Support for Intel's Itanium, the chip-maker's long-awaited 64-bit processor released last year, remains weak. In part, that weakness has come from the fact that it has gotten lukewarm support from the ISV community,software developers and server vendors.

According to Gartner, Itanium will only account for roughly 8 percent of the server market in 2007. Hewlett-Packard, which lined up around Itanium back in the mid-1990s when it was first announced, remains committed to the platform, maintains Hewlett-Packard CEO Carly Fiorina.

"We think Itanium is absolutely the right bet to have made and the right bet to continue to make," she said at the Gartner event. "We have seen very good acceptance of Itanium in the technical-computing market, and we think it is now ready to move into commercial applications."

And Barrett notes that he's convinced the software industry and computer OEMs will build around Itanium. "We're working with the entire ecosystem," Barrett says, although Sun Microsystems is an obvious exception.

A key innovation from Intel to watch, Barrett says, is wireless. Intel is readying built-in, dual-band 802.11a and 802.11b wireless support in its notebook processor, which will be released in the first quarter of next year. Later in 2003, look for that built-in wireless capability on Intel's desktop processors, Barrett says.

Storage a Prime Target

Like Barrett, Cisco Systems CEO John Chambers says price/performance growth will continue unabated. But Chambers' strategy is for Cisco to leverage the infrastructure it already offers and extend into complementary areas, including storage, IP telephony and security. Boasting an R and D budget of $3.3 billion, Chambers says Cisco will grow to become a leader in the storage industry. But Cisco isn't going to rely on R and D alone,it will partner and make acquisitions to reach the top.

"I wouldn't bet against us," Chambers says.

Where R and D will fit in, Chambers says, is in letting companies leverage the intelligence from their existing network infrastructures.

"It's natural that storage will play in this environment," Chambers says.

But all of the storage players,IBM, EMC, Hitachi and HP,are making a big push to add intelligence to storage in what is loosely termed storage virtualization, which lets companies link disparate SAN resources.

"Virtualization is a big deal," HP's Fiorina notes.

Virtualization will extend beyond storage, though. For example, while Sun Microsystems says it can virtualize storage resources through Java and technology provided by

Acton, Mass.-based Pirus Networks, McNealy says Sun will shortly announce plans to offer a virtualized server architecture, followed by a move to use virtualization techniques to provision services and, ultimately, for functions such as telemetry. Of course, the downside of virtualization is it commoditizes hardware. However, McNealy acknowledges the painful truth: "If we don't cannibalize ourselves, somebody else will."

One key component around virtualization will be Web services, which uses standard protocols to connect disparate systems and applications. Proponents of Web services based on XML and its derivatives argue that software based on standards such as SOAP and WSDL will bridge everything from disparate servers to various devices and gadgets.

"The benefit of XML, we think, is best characterized as helping connections," says Microsoft CEO Steve Ballmer, noting that XML will help connect information from disparate resources. Customers will need a compelling reason to upgrade applications such as Microsoft Office, which will include such new features as xDocs, a tool that will aid in helping users find information. With support for XML and Web services and its promise to make Office far more useful in gathering information, Ballmer believes Microsoft will be able to make such a case.

"We see ways to help knowledge workers [and information workers that go far beyond what we are doing today," Ballmer says. "Business intelligence is very much on people's minds. I think the world only scratched the surface in terms of technology to help with business intelligence."

Ballmer insists innovations such as handwriting and voice recognition, along with added intelligence to applications based on Web services, will be key enablers of productivity. Solution providers would be well-served to get into this cutting-edge segment.

Another emerging area to watch is IP telephony. Cisco and Avaya are making big bets that companies will either replace their existing PBXs or augment them with systems that run telephony over data networks. But, how quickly will this happen?

"The timing is very uncertain," Avaya CEO Donald K. Peterson said in a recent interview with VARBusiness. "I'm old enough to have lived through the analog-to-digital conversion unfortunately, and that took 20 years." Realistically though, Peterson expects to see significant growth in the next three to five years.

Employing standards and, thereby, commoditizing products is another vendor strategy. And if there's one player looking to commoditize as much as possible, it's Dell. But while CEO Michael Dell will not apologize for undercutting rivals through his company's direct approach, he reminds his critics that Dell holds 750 patents and sits on some key standards bodies.

"I think, somehow, the direct model sort of overshadows the other skills that Dell has in research, development and manufacturing," Dell says. "There's a lot of innovation that could be made within a standard. Dell has often been the first to drive rack densities, and new performance points and serviceability features into industry-standard-based products. We actually love the fact that standards and commoditization occur within our industry."