Outlook 2012: Mobility & Platform War Begins

Monumental changes are occurring and accelerating in the IT industry, and events over the next years will determine winners and losers in what could be a nearly $2 trillion market by 2012, according to IDC . All indications are that established companies across various segments of high-tech in Western nations (IBM, Microsoft, and Oracle) will face strong competitive pressures from upstart rivals, including companies in emerging economies.

The research firm recently came out with its top predictions for 2012 but emphasized that the factors and issues addressed in its list will determine which of the current industry players will be left standing by 2020 and which ones would have been acquired as leaders race to consolidate their positions. While some have been reluctant to embrace cloud-based technology because they believe it is unlikely to overcome security concerns and other teething problems -- others caution it cannot deliver as much fundamental changes as many expect -- IDC is predicting it would drive the bulk of IT spending over the next years.

The battleground for the next high-tech products war will be in the communications arena where companies supplying mobile devices will duke it out with platform software application providers. OEMs, service providers, and other high-tech companies that are today struggling to establish a foothold in the sector will pour billions into R&D and capital expenses, as well as marketing to distinguish themselves and nudge aside smaller rivals. One likely group of losers in this war could be personal computer makers since it's likely smartphones and tablets could surpass the PC in annual shipment by as early as 2012, according to IDC.

"The mobility market will see heated competition in 2012 as Microsoft joins the crucial battle for dominance in the mobile operating system market and the Kindle Fire challenges the iPad in the media tablet market," IDC said in a statement. "Competition will also characterize the world of cloud services in 2012 as the strategic focus shifts from building infrastructure to the creation of application platforms and ecosystems."

It's not clear how the changes foreseen by IDC will play out in 2012 and beyond. What's obvious, however, is that no single company can expect to dominate any of the different market segments, whether it be smartphones, tablets, or cloud computing. Also, our current assumptions about who will win are so far focused on enterprises in the West, whereas companies in Asia are also fighting for a slice of the market. Pricing will also be a major source of both conflict and differentiation in all these markets. The window of opportunity for charging premium prices on devices and software will be narrower, which will sorely test companies like Apple. (See: Price Showdown.)

Here are IDC's predictions:

1. IT spending: Worldwide IT spending will grow 6.9%, surprisingly solid growth in a fragile, recovering economy. Mobile devices and apps and emerging markets will be the biggest growth drivers, while European debt issues will dominate downside risks.
2. East vs. West: Emerging markets IT spending will grow 13.8%, driving a whopping 53% of IT growth. In the second half of 2012, China will supplant Japan as number 2 in the IT market.
3. Winners and losers: "Mobility wins" will be the top theme of the year as mobile devices outship PCs by more than 2 to 1 and generate more revenue than PCs for the first time. 85 billion mobile apps will be downloaded, and mobile data network spending will exceed fixed data network spending for the first time.
4. All in the cloud: Spending on public and private cloud services, and the building of those services (the "cloud arms dealer" opportunity), will reach $60 billion. Amazon will join the $1 billion IT vendor club, and the strategic focus in the cloud will shift from infrastructure to application platforms and the race to build the largest portfolios and ecosystems around those platforms.
5. The essentials: Big Data will join mobile and cloud as the next "must have" competency as the volume of digital content grows to 2.7ZB (1ZB = 1 billion terabytes) in 2012, up 48% from 2011, rocketing toward 8ZB by 2015. There will be lots of Big Data -- driven mergers and acquisitions (M&A) activity.
6. M&A frenzy: Major IT vendors will make "statement" acquisitions in social networking as social technologies become a core part of IT's next growth platform. Social platform leader Facebook will attempt to leverage its consumer dominance into a much broader role serving businesses in B2C commerce.
7. Redefining social: As the number of intelligent communicating devices on the network will outnumber "traditional computing" devices by almost 2 to 1, the way people think about interacting with each other, and with devices on the network, will change. Look for the use of social networking to follow not just people but smart things.
8. Who's getting rich: Much of the money will be made on top of the "third platform" by building high value, vertically focused solutions. The buildout of these solutions -- in healthcare, energy, government, financial services, and retail -- will accelerate in 2012 -- leaving IT providers without vertical competency on the sidelines.

Let me know your thoughts on these predictions by leaving a comment below. Without a doubt, we are living in challenging as well as exciting times.