Introduction to the InfoTech Industry
The technology breakthrough that enabled the modern computer occurred over 60 years ago when researchers at Bell Laboratories in New Jersey created the first working transistor on December 16, 1947. William Shockley, John Bardeen and Walter Brattain received a well-deserved Nobel Prize in Physics in 1956 for their groundbreaking work in transistors.
What started with one transistor has grown at an astonishing rate. The Semiconductor Industry Association estimates that in 2008, a total of 6 quintillion transistors were manufactured (that’s a six followed by 18 zeroes), an amount equal to 900 million transistors for every person on Earth. To see this growth in transistors in action, consider the steady evolution of Intel’s semiconductors. In 1978, its wildly popular 8086 processor contained 29,000 transistors. The first Pentium processor was introduced by Intel in 1993, with 3.1 million transistors. In 2007, each of Intel’s Zeon Quad-Core processors contained 820 million transistors. In 2009, the company will commercialize its new monster chip, code named Tukwila, with 2 billion transistors!
The worldwide market for information and communications technologies and services (ICT) was estimated at more than $3 trillion in 2006, growing to $3.7 trillion in 2008. That number will grow further to more than $4 trillion by 2011. (These numbers are according to data developed by Global Insight, Inc. as published by WITSA, the World Information Technology and Services Alliance, www.witsa.org.) Annual growth in global ICT was estimated at 10.3% for each of 2007 and 2008, slowing to 3.6% by 2011.
Are the boom years in IT spending over? It certainly looks that way for now, but watch for a rebound by 2012. Analysts at technology research firm IDC revised their estimates of global spending downward in a November 2008 press release. According to their analysts, global spending on IT will grow by only 2.6% in 2009, down from a previous estimate of 5.9%. Growth in the U.S. looks particularly dismal by their estimate, at 0.9% for 2009. IDC estimated worldwide spending on IT at $1.37 trillion for 2008. (Note: their figures do not include the communications segment, and are consequently much lower than those of WITSA.)
For 2008-2009, a global economic slowdown will dampen hardware and software sector growth. Nonetheless, sales through 2008 were relatively strong for such items as notebook computers and smaller “netbooks” (a sector in which prices have dropped dramatically), along with advanced, Internet-enabled cell phones with color screens, electronic game players, MP3 music players, digital cameras, servers and many other types of advanced consumer and business electronics. In 2009, consumer purchases of electronic items will be particularly soft, while business enterprises will be watching their budgets closely, investing only in those projects that will clearly create operating efficiencies.
Meanwhile, many major tech companies announced layoffs in late 2008 and early 2009. Companies in this sector will be doing the same thing that their customers will be doing: trying to cut operating costs and reduce risks.
Emerging markets are of extreme importance to the IT sector. Developing countries now account for more than one-half of all sales of PCs, and for about 70% of unit sales of cell phones. China has grown to be the number five market worldwide for IT expenditures. A recent study by the OECD, titled “Information Technology Outlook,” shows that developed nations’ share of global IT spending was only 76% in 2008, compared to 85% in 2003.
Worldwide sales of semiconductors decreased 2.8% to $248.6 billion in 2008 from $255.6 billion the previous year. Fourth quarter sales were extremely dull, and the outlook for 2009 is not promising.
Gartner estimated growth in the global PC market at 10.9% for 2008, with 302.2 million units shipped worldwide. As with the semiconductor sector, PC sales were dismal in the fourth quarter of the year.
The InfoTech industry is galloping into globalization at a very rapid rate. Research, development and manufacturing of components and completed systems have grown quickly in the labs and manufacturing plants of India, China, Taiwan, Korea, the Philippines and Indonesia, among other lands. Computer services continue to move offshore quickly, particularly to the tech centers of India. Asian PC brands are gaining strength, including Acer and Lenovo.
While the 1970s and 1980s will be remembered as the “Information Age,” and the 1990s will undoubtedly be singled out in history as the beginning of the “Internet Age,” the first decades of the 21st Century may become the “Broadband Age” or, even better said, the “Convergence Age.” A few years back, the advent of the networked computer was truly revolutionary in terms of information processing, data sharing and data storage. In the ‘90s, the Internet was even more revolutionary in terms of communications and furthering the progress of data sharing, from the personal level to the global enterprise level.
Today, broadband sources such as Fiber-to-the-premises, Wi-Fi and cable modems provide high-speed access to information and media, creating an “always-on” environment for many users. The result is a widespread convergence of entertainment, telephony and computerized information: data, voice and video, delivered to a rapidly evolving array of Internet appliances, PDAs, wireless devices (including cellular telephones) and desktop computers. This will fuel the next era of growth. Broadband access has been installed in enough U.S. households and businesses (more than 120 million in 2008) to create a true mass market, fueling demand for new Internet-delivered services, information and entertainment. Growth in broadband subscriptions worldwide is very strong.
The advent of the Convergence Age is leading to a steady evolution in the way we access and utilize software applications.
| Major innovations due to the Convergence Age: 1) On the consumer side, widespread access to fast Internet lines has created a boom in user-generated content (such as Flikr, YouTube and Wikipedia); games; social networking (such as Facebook and MySpace); as well as TV, radio and movies delivered via the Internet. 2) On the business side, the Convergence Age is leading to rapid adoption of Software as a Service. That is, the delivery of sophisticated software applications by remote servers that are accessed via the Internet, as opposed to software that is installed locally by its users (such as Salesforce and Microsoft’s Windows Live). 3) On the technology side, the Convergence Age is leading to booming growth in computing power that is distributed over large numbers of small servers, now referred to as “Cloud Computing.” 4) Mobile computing is booming worldwide, taking advantage of the three trends listed above. |
The promise of the Convergence Age—the delivery of an entire universe of information and entertainment to PCs and mobile devices, on-demand with the click of a mouse—at hand. Consumers are swarming to new and enhanced products and services, such as the iPod and the iPhone. Over the next five to ten years, significant groundbreaking products will be introduced in areas such as high-density storage, artificial intelligence, optical switches and networking technologies, and advances will be made in quantum computing.
The InfoTech revolution continues in the office as well as in the home. The U.S. workforce totals more than 150 million people. Microsoft has estimated that there are 40 million “knowledge workers” in the U.S. A large majority of the workforce uses a computer of some type on the job daily, in every conceivable application—from receptionists answering computerized telephone systems to cashiers ringing up sales at Wal-Mart on registers that are tied into vast computerized databases. This is the InfoTech revolution at work, moving voice, video and data through the air and over phone lines, driving productivity ahead at rates that we do not yet know how to calculate. Our ability to utilize technology effectively is finally catching up to our ability to create the technologies themselves. We’re finding more and more uses for computers with increased processing speed, increased memory capacity, interfaces that are friendly and easy-to-use and software created to speed up virtually every task known to man. Cheaper, faster chips and more powerful software will continue to enter the market at blinding speed.
InfoTech continues to create new efficiency-creating possibilities on a continual basis. Now, RFID (radio frequency ID tagging, a method of digitally identifying and tracking each individual item of merchandise) promises to revolutionize logistics and drive InfoTech industry revenues even higher.
The health care industry is undergoing a technology revolution of its own. Patient records are slowly going digital in standardized formats, and RFID is starting to make hospital inventories more manageable.
For businesses, the stark realities of global competition are fueling investments in InfoTech. Demands from customers for better service, lower prices, higher quality and more depth of inventory are mercilessly pushing companies to achieve efficient re-stocking, higher productivity and faster, more thorough management information. These demands will continue to intensify, partly because of globalization.
The solutions are rising from InfoTech channels: vast computer networks that speed information around the globe; e-mail, instant messaging, collaboration software and improved systems for real-time communication between branches, customers and headquarters; software with the power to call up answers to complex questions by delving deep into databases; satellites that are beginning to clutter the skies; and clear fiber-optic cables that carry tens of thousands of streams of data across minuscule beams of light. Businesses are paving the paths to their futures with dollars invested in InfoTech because: 1) substantial productivity gains are possible; 2) the relative cost of the technology itself has plummeted while its power has multiplied; and 3) competitive pressures leave them no choice.
from : www.plunkettresearch.com
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