Predictions: the market will Cool off, and change faces

Gartner, a billion-dollar market research firm with more than 10,000 clients, recently issued two predictions concerning the near-term and ten-year horizon of the computer industry. Either one may have a big impact on your business - if they come true.
First, let’s look at the near-term prediction, if only because it’s more specific. Gartner says that the global PC market will see slower growth in 2006 than it did in 2005 because we are entering another down-slope in the desktop replacement cycle. Growth will amount to 10.7 percent this year (for a total of 234.5 million units) compared to 15.5 percent last year. Desktops will sag while mobile units will account for the growth. But all bets are off if the release of the Microsoft Vista operating system later this year does not go well. Gartner’s competitor, IDC, has produced similar figures, predicting a growth of 10.5 percent this year, as opposed to 15.9 percent last year.
But that was kid stuff. A previous day, at CeBIT , Steve Prentice, Gartner’s head of research, gave a presentation titled ‘Gartner’s 10-Year Scenario for IT, Business and Society.’ Basically, he predicted that eight trends (in four pairs) will unleash vast changes on the industry as well as society as a whole.
The first pair of trends is commoditization and consumerization. PCs have become cheap commodities on the consumer market, and other expensive business equipment and processes will follow. This will destroy the ‘balance of power’ between vendors, manufacturers, consumers, and the government, as everyone will be able to do everything.
The second pair of trends is tera-architectures and virtualization. The on-going commoditization will cause the demand for infrastructure capacity to rise by a factor of 100 in the next ten years, and virtualization will allow distributed software in those low-cost PCs to be combined into unified, powerful systems. He pointed to Google, which uses 170,000 servers. The combination, along with a lot of business process automation, could bring about the long-sought ‘Real-Time Enterprise’, which can sense problems and opportunities in its environment.
The next pair of trends would be new development models, and new acquisition models. Software will be developed, and sold, as a metered service, like electricity. This will mean less money up-front for the developers, who will have to struggle with their business models.
Something similar may even happen in the hardware market. The hardware may become so cheap that the only profit will be from management and support services. Ballooning storage, and the growth of government regulations that concern stored data, may fuel the market more than the hardware does. With massive bandwidth becoming widely vailable, the need for local devices will not seem pressing. Users may elect to subscribe to a shared service, using a local terminal.
The final pair of trends is community and collaboration. By 2010, Gartner predicted, 70 percent of the people in developed nations will spend 10 times longer per day interacting on-line than face-to-face. Communities will no longer be defined by geography. Instead, they will become the people you share information with, where-ever they are. Traditional broadcast advertising and marketing will suffer, but other ways will be found to perform advertising.
Activist communities will become as powerful as any current power centers, since they will have access to the same tools of mass persuasion but will use them with more passion. The damage that the disclosure of negative information can cause will get worse and worse. Ethical and environmental issues will carry more and more weight, since they are important to technically literate people. And established corporations will always be looking over their shoulders, because some tiny start-up may have found a technological wrinkle that blows away their business.
Wonderful. But keep in mind that a lot of what Prentice was predicting is not new. Software applications being sold as services was being predicted 10 years ago, and we are still buying software instead of sending monthly checks to Bill Gates. The dot-com boom was based on the assumption that technology would revolutionize business, and the resulting failures now litter the landscape. ‘Modem communities’ were being talked about 20 years ago, but cafes and parks still have people in them.
On the other hand the pace of change is hardly slowing down, and massive bandwidths and ever-more-powerful PCs give more and more scope to the forces of change. But even if everything Prentice says is true, it’s hard to imagine what specific things you can do about it. Expecting change, and not falling in love with any long-term configurations, would seem to be the best anyone can do on an on-going basis.

Lamont Wood