IDG looking at China and quicker move from older technologies

In the year-end predictions game most technology forecasts tend to be either blue-sky or boring, flights of imagination or a firm grasp of the obvious.

For the last several years IDC has published prediction reports that generally avoid the pitfalls of the genre, and offer a useful framework for thinking about the trajectory of trends in technology.

The technology research firm’s predictions for 2015, published on Tuesday, is a 17-page report that is rich in numbers and analysis.

Beyond the detail a couple of larger themes stand out. First is China. Most of the reporting and commentary recently on the Chinese economy has been about its slowing growth and challenges.

"In information technology it's just the opposite," Frank Gens, IDC's chief analyst, said in an interview. "China has a roaring domestic market in technology."

In 2015 IDC estimates that nearly 500 million smartphones will be sold in China, three times the number sold in the US and about one third of global sales.

Roughly 85 per cent of the smartphones sold in China will be made by its domestic producers like Lenovo, Xiaomi, Huawei, ZTE and Coolpad.

The rising prowess of China’s homegrown smartphone makers will make it tougher on outsiders, as Samsung’s slowing growth and profits recently reflect.

More than 680 million people in China will be online next year, or 2.5 times the number in the US.

And the China numbers are poised to grow further, helped by its national initiative, the Broadband China Project, intended to give 95 per cent of the country’s urban population access to high-speed broadband networks.

In all China’s spending on information and communications technology will be more than $465 billion in 2015, a growth rate of 11 per cent. The expansion of the China tech market will account for 43 per cent of tech-sector growth worldwide.

Another theme in the IDC report is the quickening pace of the move from older technologies to new ones.

Overall spending on technology and telecommunications, IDC estimates, will rise by a modest 3.8 per cent in 2015. Yet the top-line is in what the research firm calls “3rd platform” technologies (cloud, mobile, social and big data). By contrast, older technologies will face a no-growth “near recession”, according to IDC, and “will shift fully into recession” by the second half of next year.

IDC's 3rd platform is similar to what Gartner, another big research firm, has called a "nexus of forces" sweeping through the industry. (Gartner's ingredients are virtually the same as IDC's with slightly different labels – social interaction, mobility, cloud and information). The 1st platform, in IDC's taxonomy, was the mainframe era, running from the 1960s into the 1980s. The 2nd platform included personal computers and the internet, and began in the 1980s and ran through the middle of the first decade of this century.

Cloud-computing data centres are the engine rooms of the other 3rd platform technologies of mobile, social and big data. Building these cloud-power plants is increasingly a costly, high-stakes endeavour. In 2015, IDC predicts, there will be a winnowing.

The leading players will keep spending and growing, and IDC identifies the leaders as Amazon, Google, Microsoft and IBM. "But we'll see a lot of dropouts as companies pull back from cloud infrastructure and focus on what they're good at," Mr Gens said.

Candidates to drop out, he said, include Hewlett-Packard and the telecommunications companies.

Salesforce, a leader in cloud-based business software, may want to do a deal with one of the big builders of cloud data centres, Mr Gens suggested. That way Salesforce could concentrate its resources on software – as the German software maker SAP did recently in a deal with IBM.

But while some retreat, China will likely produce a major cloud rival or two, IDC predicts. Alibaba, China’s dominant online merchant, Baidu, a Chinese search engine, or Tencent, China’s big social network, might well move beyond building data centres for their own use to supplying cloud computing as a service – the path taken by both Amazon and Google.

"Driven by their massive domestic market," IDC predicts, "one or more of these big three cloud-based giants will challenge Amazon, Microsoft, IBM, Google" and others over the next three to four years. – Copyright New York Times 2014