Making its annual Top 10 IT predictions for 2002, International Data Corp. on Thursday forecasted that hype surrounding Web services would reach a fever pitch, that Linux would have a "breakout year," and that IT spending would see a gradual upswing beginning no later than mid-year.
But although the noise level about Web services may prove deafening this year, the delivery of meaningful products and services may not occur for another few years. Web services holds a lot of long-term promise as a key piece of the new computing architecture, but may only be an emerging form of middleware over the short term.
"The problem [with Web services] has been they are being driven by the standards groups, and that a lot of the focus has been on their long-term potential of them in terms of applications talking to each other and dynamically finding and linking to each other. But businesses right now are not investing too much in long-term strategies," said Rob Hailstone, director of IDC's enterprise system infrastructure and software research.
Hailstone said he believes Web services to be "pretty good" infrastructure technology for improving IT shops' in-house development productivity, for integrating existing applications and otherwise greatly simplifying a number of existing technical tasks that are now difficult.
"I expect that in 2002 we will see people experimenting with Web services architectures within the confines of the firewall, and then having a gradual exploitation of that outside [the firewall] later on," Hailstone said.
Over the short term Hailstone does not see Web services resulting in the widespread componentization of software, which would significantly drive down software prices, but he added that if that became a significant demand among IT shops, Web services would play an integral role in making that happen.
IDC believes that Linux over the course of this year will prove it has staying power based on the continued financial and marketing commitment of companies such as IBM Corp. and Hewlett-Packard Co., as well as its continued success among a variety of service providers, its synergy with IA64-based servers, and its growing influence on the unification of Unix market.
"Going back more than a decade we have seen a series of failed efforts to unify Unix around a common set of standards. What is ironic today is we see major Unix vendors coming up with strategies to interoperate with Linux at the API or ABI levels. It could be that in five years it will be hard to distinguish between a Unix and Linux market on the server side," said Al Gillen, IDC's research manager of operating system environments in Framingham, Mass.
Opportunities for Linux on corporate desktops over the upcoming year in the United States continue to be dim. Gillen believes the iron grip Microsoft's Windows has held on desktop systems is unlikely to be loosened by Linux. He said Windows accounted for "in excess of 92 percent" of all new license shipments in 2001.
But in some developing countries, particularly China, Linux appears to be making significant inroad against Microsoft on client-based systems. Gillen said that currently Linux is on the "vast majority" of new systems in that country.
This trend could prove a significant one if one of IDC's other predictions come to pass: that China will become the world's third largest IT market by 2010. Although this prediction wanders well outside the next 12 months, IDC analysts did say that in either 2002 or 2003, China would represent a larger IT market than Canada and Italy.
"With China entering into the World Trade Organization [WTO] in 2002, thereby helping its 25 percent growth rate in IT spending, and as it gets more competitive and produces more exports, there are no barriers except political ones to stop China from reaching this goal," said John Gantz, IDC's Chief Research Officer in Framingham, Mass.
Although not making it one of its formal Top 10 predictions, IDC analysts discussed the specter of the proposed Hewlett-Packard-Compaq merger. They concluded that either together or apart the two companies will find that an evolving IT market will favor companies with focus skill sets, such as having the ability to support volume production or technology ownership.
At first glance, according to one analyst, the merger appeared to be mostly about the two companies achieving enough sheer size, and a broader product portfolio in order to more effectively compete against IBM's product divisions and its mammoth Global Services organization. But upon more detailed analysis there are other key factors.
"We find that the other reasons are balancing the volume and the value businesses of both HP and Compaq have in order to create more end-to-end solutions, and also shifting R&D expenditure away from microprocessors and investing more in printers and software servers," said Jean Bozman, IDC's research director of global enterprise server solutions in Mountain View, Calif.
At the same time, according to Bozman, both companies must also bring together a competent management team quickly, retain key employees and prevent market share loss, while continuing to grow revenues.
"The question is can they grow to be a large entity so that when the next wave of IT spending kicks in, they are ready to compete," Bozman said.
Other predictions included:
-- Microsoft will sell 75 million Windows XP licenses this year, although the operating system will not have the influence that Windows 95 did in helping drive hardware sales. But Microsoft must deal with a number of enterprise-level issues, such as security and licensing, around Windows XP and the upcoming .Net server versions of Windows XP.
-- Streaming media will have an eye-opening year that will see the market coalesce around key standards including MPEG4 and vXML2.0, as well as the growing competition among IBM, Real Media ,and Yahoo.
-- There will be significantly more attention paid by enterprises to wireless-based technologies and services. IDC predicts 2002 is the year IT shops will have to develop a wireless strategy, although this need will likely be recognized after the fact and drive a year-end spike in demand for consulting.
-- Corporations will "reset" their IT security plans in all aspects. Calling it the "bin Laden effect," Gantz said the focus of IT security will shift from authentication, authorization, and administration to business continuity.
-- This year will also be the year digital identity services, such as Microsoft's Passport and competitive offering from Yahoo and AOL, become real.
-- Server blades will not necessarily be a big money-maker, although it will disrupt the entry-level server and appliance markets with several major players trying to "co-opt" the smaller ones who forged the trend.
Users can obtain more information about IDC's forecasts for 2002 by going to www.idc.com/itmarkets.