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IDC Predicts Cloud Services to Create a New Mainstream for the IT Industry

Cloud services, mobile computing, and social networking to mature and coalesce in 2011

Transformation has been a recurring theme in the annual International Data Corporation (IDC) Predictions over the past several years. During this time, a wave of disruptive technologies has emerged and evolved, forged by the pressures of a global economic recession. In 2011, and certainly beyond, IDC expects these technologies - cloud services, mobile computing, and social networking - to mature and coalesce into a new mainstream platform for both the IT industry and the industries it serves.

"In 2011, we expect to see these transformative technologies make the critical transition from early adopter status to early mainstream adoption," said Frank Gens, senior vice president and chief analyst at IDC. "As a result, we'll see the IT industry revolving more and more around the build-out and adoption of this next dominant platform, characterized by mobility, cloud-based application and service delivery, and value-generating overlays of social business and pervasive analytics. In addition to creating new markets and opportunities, this restructuring will overthrow nearly every assumption about who the industry's leaders will be and how they establish and maintain leadership."

The platform transition will be fueled by another solid year of recovery in IT spending. IDC forecasts worldwide IT spending will be $1.6 trillion in 2011, an increase of 5.7% over 2010. While hardware spending will remain strong (7.8% year-over-year growth), the industry will depend to a larger extent on improvements in software spending (5.3% growth) and related project-based services spending (3.5% growth), as well as gains in outsourcing (4% growth). Worldwide IT spending will also benefit from the accelerated recovery in emerging markets, which will generate more than half of all net new IT spending worldwide in 2011.

Spending on public IT cloud services will grow at more than five times the rate of the IT industry in 2011, up 30% from 2010, as organizations move a wider range of business applications into the cloud. Small and medium-sized business cloud use will surge in 2011, with adoption of some cloud resources topping 33% among U.S. midsize firms by year's end. Meanwhile, the more nascent private cloud model will continue to evolve as infrastructure, software, and service providers collaborate on a range of new offerings and solutions. Meanwhile, the vendor battle for two cloud "power positions" will be joined to determine on whose cloud platform will solutions be deployed, and who will provide coherent IT management across multiple public clouds, customers' private clouds, and their legacy IT environments.

Mobile computing - on a variety of devices and through a range of new applications - will continue to explode in 2011, forming another critical plank in the new industry platform. IDC expects shipments of app-capable, non-PC mobile devices (smartphones, media tablets, etc.) will outnumber PC shipments within the next 18 months - and there will be no looking back. While vendors with a PC heritage will scramble to secure their position in this rapidly expanding market, another battle will be taking place for dominance in the mobile apps market. The level of activity in this market will be staggering, with IDC expecting nearly 25 billion mobile apps to be downloaded in 2011, up from just over 10 billion in 2010. Over time, the still-emerging apps ecosystems promise to fundamentally restructure the channels for all digital content and services to consumers.

Meanwhile, social business software has gained significant momentum in the enterprise over the past 18 months and this trend is expected to continue with IDC forecasting a compound annual growth rate of 38% through 2014. In a sure sign that social business has hit the mainstream, IDC expects 2011 to be a year of consolidation as the major software vendors acquire social software providers to jump-start or increase their social business footprint. Meanwhile, the use of social platforms by small and medium-sized businesses will accelerate, with more than 40% of SMBs using social networks for promotional purposes by the year's end.

As the new mainstream IT platform coalesces in the months ahead, IDC expects it to lay a foundation for IT vendors to support, and profit from, a variety of "intelligent industry" transformations. In retail, mobility and social networking are rapidly changing consumers' shopping experience as they bring their smartphones into the store for on-site price comparisons and product recommendations. In financial services, mobility and the cloud are bringing mobile banking and payments closer to reality. In the healthcare industry, IDC expects 14% of adult Americans to use a mobile health application in 2011.

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