Quocirca’s Straight Talking... What to expect in 2004

Kicking off a brand new series exclusive to silicon.com, Quocirca's service director Clive Longbottom asks what - and who - the winners and losers will be over the next 12 months.

With 2003 in the past, it’s time to look to the future and see whether the promised upturn is around the corner, what the hot-spot areas are going to be and which companies are going to do well – or struggle.

First, Quocirca’s research shows that there will be a slight overall increase in IT expenditure in 2004 – nothing to set the IT world on fire but at least a move in the right direction. What areas are likely to benefit from this extra money? Well, it seems that security is back on the agenda – but woe betide any vendor that goes in with point solutions or with big tales of FUD (Fear, Uncertainty and Doubt) and a message of the customer requiring Fort Knox-style security. The message here will be Suitable Security – what do I need for my purposes? Here, winners are likely to be the likes of Symantec, NAI, CA and IBM GS.

Next is IP telephony (IPT) and voice over IP (VoIP), although the market is completely confused by what the fuss is all about – due mainly to poor marketing and messaging from the vendors themselves. The majority of new systems are now either hybrid or pure VoIP systems. The age of the standard PBX is passing – but the long life cycle of these systems will guarantee that they are still around for many years to come. Driven by the need for convergence of messaging - and the reality that it can now be done - IPT/VoIP will come of age in 2004. Winners here will include Cisco and Avaya, alongside smaller upcoming players such as Interactive Intelligence.

Next is utility computing – on-demand, on tap, grid, whatever you want to call it. Again, the messaging from the vendors has not yet completely resonated with the markets. The differences in approaches are not understood and the carping of vendor A against vendor B’s offering seems hell bent on inflicting fatal wounds to a market that isn’t even there yet. However, the need to sweat existing assets yet provide a flexible technological infrastructure will drive users towards using such technologies.

Linux will be a winner – but not to the extent the Ivory Tower Linux Bigots would like. Microsoft will not come crashing to the ground, and the 'versions' (distributions) of Linux that will be successful will be ones with a strong commercial underpinning – such as RedHat and Novell/SuSE. Even then, the big bucks will be made by the usual suspects – IBM, HP, Dell and so on, with ISVs such as Oracle and SAP providing some back end muscle to the cause. Quocirca’s research has shown that as far as the user market is concerned, Linux is just another tool for the toolbox – which is how it should be – and that the introduction of yet another operating system is still seen by many as a complete stop on Linux adoption. However, expect to see Linux shipments continue to grow, steadily and well, as it continues to create the market position for itself among the existing operating systems and other tools.

How about areas that will be seen as losers in 2004?

Outsourced call centres top the list. There will be a complete backlash against the whole idea – no matter where in the world the outsourcing is taking place. The idea that India is just full of highly qualified call centre operatives is just as untrue as the feeling that Ireland was, or that Romania might be – there are good and bad operatives all over. There are some excellent call centres in India – but there are also many bad ones. Call quality is not always good (Yes, I am particularly looking at you, BT), and the insistence on following a script without deviation is harming many company’s brand. We expect many companies to follow Dell’s US lead and begin to pull operations back into the local areas – it is too easy to lose brand quality, and no amount of cost savings can bring that back.

Next comes Linux. Wait – isn’t this one of the big winners? Ah yes, at the server side. The wooden spoon goes to the client side. Yes, many governmental institutions are looking at it. Yes, some have even gone for it. And yes, many are wishing they hadn’t. The hidden costs of training, of product support for products with few users, of future interoperability of output formats with Linux desktop applications has bitten the backside of quite a few who saw Linux at the desktop as a means of saving money and giving Bill Gates one in the eye. Also, with the lack of agreement between the players as to what should be the one true desktop presentation standard (GNU/KDE or Gnome), Linux at the desktop will still remain an oddity, rather than a growing phenomenon.

Losers in the IT vendor stakes?

Sun – Scott McNealy is firmly entrenched into a Kamikaze dive – his comments that Sun is in great shape and that he sees no need to change show how far off the planet he has now managed to wander.

Siebel – the CRM bubble has burst and combined business functionality from the likes of PeopleSoft and even Oracle is now more competition. Revenues are tanking and there does not seem to be much left in the company to head this off.

EDS – the financial community has started to peck at the carcass, even before it is dead. Deals are now being lost as the US Navy and UK Inland Revenue deals are pulled further into the public arena. As IBM GS, CSC and others climb further up the business tree, EDS seems to be sucked into becoming a body shop – and has not, as yet, played the AT Kearney card in Europe to any extent to fight back.

And finally, one person who I truly hope will be a loser in 2004 – Darl McBride, head of SCO, who seems to have no interest in anything except lining his own pockets. Although I’m not a Linux bigot, McBride's approach to the whole Unix/Linux licence and code copyright issue has left me wishing I was one of the legal team – these are the true winners in this meaningless and mindless campaign.

To you all out there – a happy and prosperous 2004 from Quocirca.