IDC Inaugurates the 2015 Prediction Season

Stephen DeAngelis

December 8, 2014

Every year daring prognosticators polish their crystal balls and offer up their predictions about the coming year. Over the coming days, I will publish a series of articles looking at some of the predictions being made in areas routinely covered in this blog. The first article focuses on technology. Steve Lohr (@SteveLohr) notes, “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.” One group that Lohr claims avoids those shortcomings is IDC. “For the last several years,” he writes, “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.” [“In 2015, Technology Shifts Accelerate and China Rules, IDC Predicts,” The New York Times, 2 December 2014] The IDC report, entitled “IDC Predictions 2015: Accelerating Innovation — and Growth — on the 3rd Platform,” is a 17-page report filled analysis supporting the predictions. If the term “3rd Platform” is unfamiliar to you, it was first introduced by IDC back in 2007. The 1st Platform is the mainframe computer system that has in one form or another been around since the 1950s. The 2nd Platform is the client/server system that was introduced in the 1980s with PCs tapping into mainframe databases and applications. The 3rd Platform, according to IDC, is “built on the technology pillars of mobile computing, cloud services, big data and analytics, and social networking.” [“IDC Predicts the 3rd Platform Will Bring Innovation, Growth, and Disruption Across All Industries in 2015,” IDC Press Release, 2 December 2014] Frank Gens (@fgens), Senior Vice President and Chief Analyst at IDC, asserts:

“In 2015, the 3rd Platform will account for one third of global ICT spending and 100% of spending growth. The industry is now entering the most critical period yet in the 3rd Platform era: the ‘Innovation Stage.’ Over the next several years, we expect to see an explosion of innovation and value creation on top of the 3rd Platform’s foundation. This stage will be driven by a new wave of core technologies — Innovation Accelerators — that radically extend the 3rd Platform’s capabilities and applications across all industries.”

Perhaps the most important thing to note about IDC’s 2015 predictions is that they are based on the assumption that the pillars of the 3rd Platform are no longer simply hyped concepts or buzz words but represent foundational technologies which are going to transform some industries and likely create others. As the attached figure shows, the innovation accelerators noted by Gens include: robotics; natural interfaces; 3D Printing (aka additive manufacturing); the Internet of Things (IoT); cognitive systems; and next-generation security and are enablers of the 3rd Platform Era. This accelerator role is being driven by the rapid geometric scaling of data (in all shapes, and forms — The 5 V’s of Big Data) across the Internet of Everything (IoE). Cisco defines the Internet of Everything as the combination of the World Wide Web (WWW) and the Internet of Things (i.e., all sensors and connected people and data). Unfortunately, corporate information systems, and the data scientists they employ, are unable to linearly scale in proportion to the geometric explosion of the IoE. This necessitates the emergence of cognitive computing systems that can dynamically integrate and analyze data involving people, processes, and technologies and interpret the analysis for insights and causality. The best cognitive systems combine advanced computations and semantic reasoning to create a system that can Sense, Think, Act and Learn™ much like humans. The Enterra Solutions® Cognitive Reasoning Platform™ (CRP) does that; but, unlike humans, it performs at machine speed employing vast amounts of data and across a broad spectrum of time scales. Getting back to the topic at hand — 2015 predictions — the IDC report provides ten predictions. They are:

1. Worldwide ICT spending will grow 3.8% in 2015 to more than $3.8 trillion. Nearly all of this spending growth will be focused on 3rd Platform technologies, with spending on the 2nd Platform expected to slip into recession by the end of the year. On a geographic basis, ICT spending in emerging markets is forecast to grow 7.1% year over year while mature markets poke along at 1.4% growth.

2. Telecommunications services will see wireless data emerge as the largest ($536 billion) and fastest growing (13%) segment of telecom spending. To avoid being marginalized as little more than infrastructure providers, carriers will scramble to develop platform- and API-based services that add value and attract developers to their networks. They will also seek rapprochement with over-the-top (OTT) cloud services providers through innovative performance and revenue-sharing arrangements.

3. Mobile devices and apps will continue to charge ahead in 2015, but not at the frenzied pace seen in recent years. Sales of smartphones and tablets will reach $484 billion, accounting for 40% of all IT spending growth (excluding telecom services), while Chinese vendors capture a significant share of the worldwide market. Wearables will see an explosion of innovation, although unit sales will underwhelm. And mobile app downloads will start to slow in 2015, but enterprise mobile app development will double.

4. Cloud services will remain a hotbed of activity in 2015 with $118 billion in spending on the greater cloud ecosystem. Adoption of cloud Infrastructure as a Service (IaaS) will grow briskly (36%) as market leader Amazon comes under attack from all directions as challengers attempt the ‘Amazoning of Amazon’. Similarly, look for heightened competition among Platform as a Service (PaaS) providers as competitors engage in death match battles to attract developers and their apps and Software as a Service (SaaS) players accelerate their adoption of PaaS and cloud marketplaces. …

5. Big data and analytics will see important developments in 2015 as worldwide spending on big data-related software, hardware, and services grows to $125 billion. Rich media analytics (video, audio, and image) will emerge as an important driver of big data projects. And big data supply chains (i.e., Data as a Service) will grow in importance as cloud platform and analytics vendors offer clients value-added information from commercial and open data sets. Elsewhere, IDC expects to see important new developments in cognitive/machine learning and Internet of Things (IoT) analytics.

6. The Internet of Things is one of the most important Innovation Accelerators for growth and expansion of IT-based value in the 3rd Platform era. The invention of more and more intelligent and connected ‘things’ will drive the development of thousands of new 3rd Platform solutions. One third of IoT spending in 2015 will be focused on intelligent embedded devices outside the IT and telecom industries helped by partnerships among leading IT companies seeking to kickstart the market for industry solutions. Predictive maintenance will emerge as an important IoT solutions category.

7. Datacenters are undergoing a fundamental transformation in the 3rd Platform era as the majority of raw compute capacity and raw storage capacity moves to cloud-, mobile-, and big data-optimized hyperscale datacenters operated by cloud service providers. This shift will spark a burst of ‘cloud first’ hardware innovations and drive greater consolidation among server, storage, software, and networking vendors. IDC expects to see two or three major mergers, acquisitions, or restructurings among the top-tier IT vendors in 2015.

8. The 3rd Platform is transforming not just the technology industry; but every industry on the planet. IDC believes a number of industry disruptions, driven by 3rd Platform developments, will emerge in 2015. Examples include alternative payment networks in financial services, expansion of IoT technologies into city safety, public works and transportation systems, and the expansion of location-based services in the retail industry. The number of industry platforms – industry-specialized cloud-based data and services platforms, usually created by leaders within the industry – will expand rapidly, easily doubling in 2015.

9. In addition to the Internet of Things and cognitive/machine learning systems, two other Innovation Accelerators will become important growth drivers in 2015. ‘3rd Platform-optimized’ security solutions will help to secure the edge of the cloud (i.e., biometric security on mobile devices) and the core (i.e., encryption in the cloud will become the default practice). And threat intelligence will emerge as a killer Data as a Service category with a rapidly growing number of enterprises receiving tailored threat intelligence information. Elsewhere, 3D printing will see significant activity among conventional document printing companies as they lay the groundwork for a looming battle for commercial and industrial markets in 2016.

10. China will experience skyrocketing influence on the global ICT market in 2015 with spending that will account for 43% of all industry growth, one third of all smartphone purchases, and about one third of all online shoppers. With a huge domestic market, China’s cloud and ecommerce leaders (Alibaba in ecommerce, Tencent in social, and Baidu in search) will rise to prominence in the global marketplace. Similarly, Chinese branded smartphone makers will capture more than a third of the worldwide smartphone market.

The good news about China is that its robust ICT market is likely to spark increased consumer spending inside the country. That means that companies that already have manufacturing operations in China are likely to keep them there even if they resource other manufacturing elsewhere around the globe. As Lohr notes, “More than 680 million people in China will be online next year, or 2.5 times the number in the United States. And the China numbers are poised to grow further, helped by its national initiative, the Broadband China Project, intended to give 95 percent of the country’s urban population access to high-speed broadband networks.” Although the Chinese domestic market is often addressed as a single market, the truth is that it is made up of thousands of regional, city, and neighborhood markets that must be understood by any company desiring to capture market share. Cognitive computing systems can help companies understand the nuances of the business landscape so that products and services can be properly tailored and marketed.