IDC is out with its annual IT market forecast and, at first glance, 2008 won't be setting any box-office records, business-wise.
According to the Boston-based consultancy, growth in global technology spending will slow next year, rocked by a potential U.S. economic downturn that could crimp spending on computer hardware.
Overall, IDC estimates worldwide technology spending growth to range between 5.5 percent and 6 percent in 2008, down from about 7 percent this year. U.S. spending growth will dip to 3 percent to 4 percent next year from 6.6 percent in 2007, IDC said.
The report also predicts that companies will target faster-growing emerging markets along with small and midsize businesses, to offset slower U.S. spending growth, and in some cases, they will need to make acquisitions to launch into promising sectors.
IDC sees big software makers targeting business application firms in emerging markets such as Brazil's Datasul, China's Kingdee International Software Group, and India's 3i Infotech. A foothold in those markets will be crucial, since IDC sees tech spending in Brazil, Russia, India, China and nine other emerging countries, including Poland and Mexico, growing 16 percent in 2008.
In the report, IDC offers the following predictions for the technology sector in 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 small businesses.
-- 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.