Gray Clouds on the Horizon

Lead Analyst: Cal Braunstein

Focal Points:

• According to a new Gartner Inc. report, global IT spending percentage growth for 2012 is projected to be 3.0 percent, down from 2011 spending growth of 7.9 percent. The brightest spot in the analysis was that the telecom equipment category will grow by 10.8 percent – however that is down from 17.5 percent in the previous year. All the other categories – computer hardware, enterprise software, IT services, and telecom services – are growing slowly between 1.4 percent (telecom services) and 4.3 percent (enterprise software). The drop in spending is attributed to the global economic stresses – the eurozone crisis, weaker U.S. recovery, a slowdown in China, etc. For 2013 Gartner is projecting higher spending on hardware and software in the data center and on the desktop, better growth on telecom hardware (but down from 2012), and slightly higher spending on telecom services. In support of these projections is the latest Challenger, Gray report that shows during the first half of the year, 51,529 planned job cuts were announced across the tech sector. This represents a 260 percent increase over the 14,308 layoffs planned during the first half of 2011. Job cuts are so steep this year that the figure is 39 percent higher than all the job cuts recorded in the tech sector last year. Three tech companies are responsible for most of the job losses – Hewlett-Packard Co. (HP) announced it was slicing headcount by 30,000 and Nokia Corp. and Sony Corp. are each reducing staffing by 10,000. While the outplacement firm expected more cuts to be made over the course of the next six months, it does see bright spots in sectors of the business.
• According to Uptime Institute's recently released 2012 Data Center Industry Survey, cloud deployments have significantly increased globally over the past year. 25 percent of this year's respondents claimed they were adopting public clouds while another 30 percent said they were considering it. Additionally, 49 percent were moving to private clouds while another 37 percent were considering it. In 2011 only 16 percent of respondents stated they had deployed public clouds whereas 35 percent claimed they had deployed private clouds. 32 percent of large organizations use the public cloud, whereas 19 percent of small organizations and 10 percent of "traditional enterprises" employ public clouds. When it comes to private clouds, 65 percent of large organizations have claimed to have deployed private cloud but only 39 percent of small and mid-sized organizations were doing so. Public cloud adoption rates are 52 percent in Asia, 28 percent in Europe, and 22 percent in North America. Private cloud adoption rates are 42 percent in Asia, 52 percent in Europe, and 50 percent in the U.S. Cost savings and scalability were the top two reasons given for moving to the cloud while security was the major inhibitor for not adopting cloud computing (27 and 23 percent respectively), followed distantly by compliance and regulatory issues (64 and 27 percent respectively).
• Oracle announced the results of its big data study, in which 333 C-level executives from U.S. and Canadian enterprises were surveyed. The study examined the pain points that companies face regarding managing the deluge of data that organizations must deal with and how well they are using that information to drive profit and growth. 94 percent of respondents claimed growth with the biggest data growth areas in the areas of customer information (48 percent), operations (34 percent) and sales and marketing (33 percent).  29 percent of executives give their organization a "D" or "F" in preparedness to manage the data influx, while 93 percent of respondents believe their organization is losing revenue opportunities. The projected revenue loss for companies with revenues in excess of $1 billion is estimated to be approximately 13 percent of annual revenue from not fully leveraging the information. Most respondents are frustrated with their organizations' data gathering and distribution systems and almost all are looking to invest in improving information optimization. The communications industry is the most satisfied with its ability to deal with data – 20 percent gave their firms an "A." Executives in public sector, healthcare and utilities industries stated they were the least prepared to handle the data volumes and velocities. 41 percent of public sector executives, 40 percent of healthcare executives, and 39 percent of utilities executives rating themselves with either a "D" or "F" preparedness rating.

On the Mobile Platform Horizon

Focal Points:

• In an announcement that came as a surprise to most observers this week, Microsoft showcased its new Surface tablet design in hardware that will be Microsoft branded. Not to be confused with a tabletop touchscreen design of the same name from the company a few years back, the tablet-sized Surface comes in two flavors running different versions of Windows 8. The mainstream Surface runs Windows 8 RT and is powered by ARM-based processors from Nvidia Corp. while the higher-end version will run Windows 8 Pro and uses Intel Corp. Ivy Bridge processors. Both devices will feature 10.6 inch screens, have built-in kickstands, magnetized screen covers that double as keyboards with a touchpad, and USB ports for connecting to peripherals.  The Surface running Windows 8 RT will come in 32 GB and 64 GB storage variants, has dimensions similar to Apple's iPad at 9.3 millimeters thick, weigh 1.5 pounds, and is priced to compete with similar tablets. The Windows 8 Pro version will weigh more and be priced higher than the Windows 8 RT offering and will offer 64 GB and 128 GB storage sizes. Though a firm launch date was not announced, availability for the ARM-based Surface should coincide with the Windows 8 launch in October and the Pro version should begin within a few months thereafter.
• Apple updated its MacBook Pro notebook this week by showcasing a slimline 0.71-inch aluminum unibody design more similar to the MacBook Air than the model it replaces. The MacBook Pro's "showstopper" is the inclusion of a 15.4-inch "retina" high resolution display similar in clarity to those on Apple's latest iPad and iPhone models. Apple has decided to drop its 17-inch display MacBook Pro and is expected to introduce a 13-inch variant with the retina display late this year. Being in the top position in the MacBook line, new models will feature quad-core Intel i7 Ivy Bridge processors, battery life lasting up to a claimed 7.5 hours, memory  configurations between 8 GB and 16 GB, solid state disk (SSD) storage in three flavors ranging from 256 GB to 768 GB.  As with most Apple hardware designs, the notebooks are not designed to be user-upgradable and require specialized tools to service or upgrade the battery, RAM, and SSD. Pricing starts at $2,199 for the model with a 2.3 gigahertz (GHz) processor, 8 GB RAM, and 256 GB of flash storage.
• Both RIM and Nokia suffered votes of "no confidence" this week as the companies struggle to survive in evolving smartphone and tablet markets. A Toronto-based equipment supplier for RIM announced that it is discontinuing manufacturing services for BlackBerry devices over the next three to six months and will take a $1 billion charge due to unsold equipment. The smartphone company's response was somewhat evasive as it noted making "changes to our supply chain as part of wider efforts to improve the efficiency and cost effectiveness." As RIM continues to prepare for the launch of forthcoming BlackBerry 10-based devices slated for release in October, the company said it will shed around 2,000 jobs – 11 percent of its workforce – to save $1 billion by its 2013 fiscal year. Similarly, Nokia detailed a series of sweeping changes that included shedding 10,000 jobs, reducing research and development efforts, and replacing some senior executives. Moody's Investors Service, Inc. slashed Nokia's credit rating to "junk" after the announcement.