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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 {complink 7014|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:
  2. 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.

  3. East vs. West:
  4. 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.

  5. Winners and losers:
  6. “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.

  7. All in the cloud:
  8. 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.

  9. The essentials:
  10. 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.

  11. M&A frenzy:
  12. 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.

  13. Redefining social:
  14. 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.

  15. Who's getting rich:
  16. 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.

14 comments on “Outlook 2012: Mobility & Platform War Begins

  1. Barbara Jorgensen
    December 1, 2011

    These all look pretty consistent with what we have been seeing from the IT world in the past year or so. The last one–the vertical platforms–is the one I least understand, though. Does this indicate the so-called horizontal markets are saturated, and everything is becoming specialized?

  2. _hm
    December 1, 2011

    Major contributor will be innovation in pipeline. It may be Apple, Google, ARM or other upcoming organization. It is too early to predict specific technology.

  3. DataCrunch
    December 1, 2011

    When you combine mobile devices with embedded smart devices, the numbers become astronomical.  Emerging fields, such as Machine-to-Machine (M2M) technology is expected explode in the coming years. In fact, in a recent research report by Analysis Mason, the global market for M2M device connections will grow to 2.1 billion in 2020.

    These types of applications can be complex and will require a tailor-made solution approach in specialized vertical markets.

  4. bolaji ojo
    December 1, 2011

    Are tablets really that vastly different than PCs to the point that they have become a class in themselves? Aren't tablets, in reality, simply scaled down PCs or must a device have a keyboard to be called a device? After pondering these questions, I could only come to the conclusion that tablets are in reality highly portable computers.

  5. Daniel
    December 1, 2011

    Ann, yesterday Samsung wins a patent war against apple in Australia and the ban for galaxy tab has been removed. I think this is the first time Samsung winning against Apple. More over I had read that they had filed a case against Apple 4S in Australian court. So I think the mobility patent war is going to be heaten 2010

  6. Anna Young
    December 2, 2011

    @Barbara, I was surprised to see that you're the first to comment on this article. Thank you for your comment.

    Yes you're correct. The approach now focuses on delivering industry specific application to a target audience.

  7. Jay_Bond
    December 2, 2011

    @Bolaji,

    I was asking myself the same question. It would appear that the general population is considering tablets to be completely separate from PCs. Yes they both have some differences, some good and some bad, but they are both PCs, the tablets just being more portable.

     

  8. Anna Young
    December 2, 2011

    @Jacob, I read that too. That is good news for Samsung. I don't think that's going to be the end of the patent war. IDC, in its report, predicted that the next high tech products war will be in the communications area. The outlook is that the large tech companies have got battles on their hands. We are going to see more upstarts company competing with the long established ones. So I foresee more courtroom drama in the coming year. What's your thoughts?

  9. Anna Young
    December 2, 2011

    @Dave, you are absolutely correct. This is why the likes of AT&T,Verizon, Sprint and T-mobile have tapped into this segment. There is vast market potential in M2M embedded cellular – based consumer electronics such as e.readers,digital photo frames,netbooks, home security monitoring and navugation device.

    What's more it is forecasted that m2m cellular connections will triple by 2014 to 75million.

  10. DataCrunch
    December 2, 2011

    @Anna, many if not all of the major carriers are now looking seriously into M2M and embedded device connectivity.  People can switch carriers pretty easily today and just transfer their numbers and get a new mobile phone, but with embedded devices the amount of devices is more numerous and they are part of a much needed solution making it harder for the customers to jump ship from the carriers and the potential for ongoing business will be typically a lot more than the usual cell phone contracts too.                    

  11. bolaji ojo
    December 2, 2011

    Dave, It's a complicated situation for consumers and service providers alike. OEMs in the consumer electronics sector make their money from volume shipment and not simply by charging higher margins — the days of lofty margins are going fast. So, as you observed, the more products proliferate, the better for manufacturers and their service partners. Many of these are licking their chops everytime they tell us we should get our systems and household equipment hooked up to the web. My newest printer is wireless, which is convenient but did I really need for it to be wireless? It was available in the store at the same price as tethered printers so I got. Now, I have a printer on which I can read the news on its tiny screen!

  12. elctrnx_lyf
    December 4, 2011

    Tablets and Smartphones could be the thing for next five years. Definitely PC makers will get into losses because of the rise in these two segments.

  13. bolaji ojo
    December 5, 2011

    Jacob, The patent war remains a distraction for all the players in the market. Yes, it is possible some infringements have occurred and these need to be resolved but it's not going to hobble competitors that much. Based on everything that's been reported so far, the combatants, whether they win or lose in patent court, only have to slightly modify their products and they are back in the market.

  14. Anna Young
    December 6, 2011

    @elctrnx_Iyf, True, there's already a record decline in the sale of PC desk top and laptops. Whilst tablets and smartphones sales are on the increase. It has been forecasted that 2012 will witness a further increase in mobile operating systems market.

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