Soft Economy Will Drive New Technologies

By Richard Adhikari

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Hammered by the global recession, players in the IT industry will have to undergo radical changes to simply survive, according to research firm IDC.

But that's not bad news for everyone.

Enterprises and small to midsized businesses (SMBs) may be poised reap the benefits of a transforming IT industry -- in the form of new developments in cloud computing, Web 2.0 and virtualization, Frank Gens, IDC's chief analyst, said during a teleconference presenting the firm's predictions for next year.

For vendors, hunkering down in these tough economic times instead of transforming themselves to leverage these kinds of technologies could mean they'll pay a heavy price, Gens said.

"Major economies will be close to flat, and the downside scenario would take them below zero percent growth -- and it looks as if IT growth could go down to around two percent," he said. "IT industry growth was seven percent in 2007 and fell to five percent in 2008, and it will take three years for the industry to return to the 2008 growth rates."

But while the outlook for IT spending is grim overall, customers are still expected to spend big on radically market-altering trends such as cloud computing, virtualization, Web 2.0 and green IT.

"The disruptive vectors of the market will be among the highest growth sectors in 2009 as their advantages are magnified in a down economy, and suppliers who slow down their transformation will limit long-term viability and miss near-term growth."

One area in particular -- cloud computing -- will be a growth sector for the next 20 years, he said.

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