Is Cloud Computing A Threat To Older Tech Companies? Part 1

Is Cloud Computing A Threat To Older Tech Companies? Part 1

Almost exactly a year ago, The Informational Data Corporation (IDC) made some pretty bold predictions regarding the development of a new high-tech industry in the convergence of social networking, and cloud-based computing and data storage.

IDC suggested that many industry giants may scramble to maintain relevance in 2012, while some startups would gain leadership positions – part of the technology industry’s fastest transition ever.

Today’s major big players may be in trouble if they don’t prepare for change.

Spending on the new technologies will reach nearly $700 billion, or about 20 percent of the $3.5 trillion in hardware, software, and services spent on information technology worldwide, IDC said. As a great deal of spending in the sector goes toward maintaining older systems, such a share for relatively new technologies is a surprising speculation. Spending on these new technologies is growing six times that of traditional computer servers and personal computers, IDC said, and by 2020 will be 80 percent industry growth.

Much of the new development will also take place in emerging markets such as China, IDC said. It predicted that 28 percent of overall spending, and 53 percent of the industry’s growth, would come from outside the United States, Japan and Western Europe. By mid- 2012, China is expected to be the world’s second largest consumer of information technology, eclipsing Japan.

Frank Gens, chief analyst at IDC and head of the study, said: “Hewlett-Packard will be challenged. Microsoft, Intel, SAP, RIM, Oracle, Cisco, Dell – they are all facing the next transition, competing to be around in 2020. At least a third will fade away.”

Among the notable claims in the forecast, IDC said that spending on hardware, software and services in cloud computing systems alone will be $60 billion in 2012. The growth rate in this sector is about four and a half times that of the industry overall. About $36 billion of that was projected spending for companies providing cloud services to businesses, and the balance will be from so-called “arms dealers,” supplying things like servers and networking gear.

Mobile devices, which in 2011 outshipped personal computers worldwide, will in 2012 generate more revenue than PCs for the first time, IDC said. Shipments of mobile devices will outstrip PCs by two to one and 85 million mobile applications, or apps, will be downloaded. More money will be spent on mobile data networks than on networks tethered by lines.

The rapid transition to mobile, driven by an explosion of tablet computers, will challenge both traditional computer software companies like Microsoft and beneficiaries like Apple, which is seeing the dominance of its iOS operating system challenged by the open source Android operating system developed by Google.

By 2013 we’ll know who the leaders are,” Mr. Gens said.

So, how accurate were IDC’s predictions?  Find our by reading Part 2 tomorrow…

By Sharon Florentine

This post is written by Rackspace blogger Sharon Florentine. Rackspace Hosting is the service leader in cloud computing, and a founder of OpenStack, an open source cloud operating system. The San Antonio-based company provides Fanatical Support to its customers and partners, across a portfolio of IT services, including Managed Hosting and Cloud Computing.

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