Channel partners and telcos which understand the ramifications of the Federal Government's flexing of political muscle atrophied by decades of deregulation stand to gain from its cash splurge as the recession bites, analysts International Data Corporation said today.
But they predicted margins will be crimped as governance plays a big hand in the state's buying decisions.
And buyers slashing budgets will spur the growth of emerging technologies such as cloud computing and netbooks bundled with mobile service plans, IDC said in its annual list of predictions.
Green IT will be an incidental beneficiary as organisations find smarter ways to do their computing in the data centre, at the desktop and on the road, IDC Pacific's managing director Graeme Muller said.
Held online as podcasts and slideshows, IDC's Directions09 canvassed topics such as virtualisation, distributed computing and channel operations.
The message for the channel was that margins on hardware will fall -- especially as netbook sales lift at the expense of notebooks driven by flight-travel restrictions, tight budgets and mobile-plan packaging -- and services were bundled with hardware.
"The slowdown is being felt hardest in the PC and peripherals markets as consumer spending declines and businesses extend their product-refresh cycles," Muller said. "Whereas the services market, operating on longer contract cycles should have better ongoing revenue streams to tide them over."
He said there were tough times but "pockets of opportunity" ahead, especially for the channel, as spending on nascent technologies boomed and shifted from hardware to services -- especially with netbooks, one of the few growing hardware categories. Again, governments will be key players as their spending packages lift overall economic activity, Muller said.
And although not all spending was aimed at IT, any government money flushing through the economy from other sources would have a likely "strong impact" on the IT industry, he said.
But even as the state increased spending, it will "press for greater value from suppliers of services", as evidenced by the recent acceptance of the Gershon Report by the Federal Government, Muller said.
"And while these do not mean lower contract prices, they will be expected to substantially increase their service offerings for a similar price."
Small and mid-market businesses that represent the bulk of Australia's private sector will go to the wall unless they get a handle on their cash flows and returns on investments, IDC said. This will drive them to seek more flexible prices from their suppliers and those vendors with cash in the bank to support such incentives will "gain a competitive advantage".
The list of 10 predictions was dominated by one thing: cutting costs.
IDC predicted that IT spending was "down but not out", falling to 2.6 percent this calendar year from 3.7 percent last year but rising to 5.7 percent next year. It hit 7.7 percent in 2007, IDC said.
As the private sector vacates the economy, governments will have a stronger hand to play -- in spending and regulation, Muller said.
This was already happening with increased regulation of telecommunications in Australia and New Zealand as they built broadband networks to compete with other countries once the recession lifted. Muller said the trend to regulation, separation and intervention is at the "tip of the iceberg".
"The telco market is at the start of a new era which will, for the time being, be dominated by governments," Muller said.
Web 2.0 and Green IT to the rescue (page 2)
Web 2.0 to the rescue
All of which is good news for poster-children of the Web 2.0 generation -- cloud computing, social media and virtualisation, IDC said.
In a January survey, IDC found that nearly 18 percent of Australian organisations use cloud services; a further 38 percent have technology pilots or are considering its use.
"The expectations for cloud [computing] are high," Muller said. "The main drivers are economic. With little or no budget to fund IT initiatives, cloud services are moving up the agenda."
A byproduct was that IT managers can respond faster to business demands, he said.
Similarly, managed data centres will grow in popularity as the economy contracts and businesses are forced to respond rapidly to deteriorating or ultimately expanding conditions.
"Consolidation will remain the vanguard of data centre initiatives" to stave off the "crippling" costs associated with their operation, Muller said.
Bloggers came in for attention in the IDC report, with 17 percent of respondents to a survey saying they "actively persuaded" influential bloggers to endorse their products to "more efficiently connect with their customers".
IDC did not say how successful these interventions were. Companies also used online forums (16 percent) and social network sites (21 percent) to push their agendas, IDC found.
"In a time when every customer counts, advanced customer-contact tools are providing smart organisations with the ability to access the new spending generation," Muller said.
Green IT
The vendor message about environmentally responsible IT was received by customers as cutting energy consumption costs, IDC said.
And virtualising the desktop is the "next obvious step", Muller said, as thin clients spread through organisations especially next year when organisations replace their machines.
"One additional driver of the deployment of thin clients and the virtualised desktop is the green-IT message. As more traditional PCs are transferred to thin clients, the greater the reduction in carbon footprint."
Although he said IDC was "very optimistic" about the environmental impact of such technologies, it was silent on how such e-waste would be managed or which organisations and vendors are best placed to handle their toxic recycling.
Netbooks will be part of the hardware refresh, IDC predicted, especially as their connectivity and portability advantages play into the hands of mobile operators. Vodafone Australia already offers a Dell netbook and 5GB of data for $59.95 a month.
"A slowing economy has put more value on people's ability to communicate and collaborate," Muller said, adding that flight-travel restrictions also lead buyers to consider the smaller form-factor netbooks.
But this trend offers a challenge to traditional retailers and resellers because netbooks' natural home is with mobile operators, bundled like a cellular phone plan.
Muller said channel partnerships with mobile operators would "proliferate" and "would change the way traditional notebooks were sold".
"The efforts that vendors will make to shift [netbooks] through non-traditional channels will challenge the way PCs are used and sold [in Australia]."
The Top 10 predictions for the year ahead
IDC top 10 predictions
1. Growth rate to slow to 2.6 percent as sales of PCs and peripherals decline. But the services market equals better ongoing revenues.
2. Governments are expected to boost spending to stimulate demand and even if that isn't aimed at IT, the technology industries will benefit strongly from a flow-on effect. But as the state enters the market vacated by private enterprise, it will demand more value from suppliers.
3. Cloud computing will gain popularity as buyers look for cheaper, better, faster ways to compute. More than half the respondents to an IDC survey are using or evaluating cloud services.
4. Companies look to social media to influence buyers and keep customers.
5. Green IT will grow in importance.
6. Managed data services and data centres will be revisited as organisations prepare for a sustained downturn.
7. Thin clients will again be the flavour of the day. Sales will grow as fleets of old PCs are retired next year.
8. Deregulation is so 1990s. Governments are flexing atrophied muscles and enforcing their views -- backed by taxpayer dollars -- on the channel and industry players such as telcos rolling out broadband networks.
9. Vendors and suppliers with cash war chests will thrive as flexible prices become the norm.
10. Netbooks bundled with mobile phone service plans will change how portable and desktop PCs are sold and will re-wire the circuitry of the channel.
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