Gartner analyst David Cearley
(Credit: Stephen Shankland/CNET)ORLANDO, Fla.--Cloud computing isn't going to be vapor much longer, Gartner said Tuesday.
The general idea--shared computing services accessible over the Internet that can expand or contract on demand--topped Gartner's list of the 10 top technologies that information technology personnel need to plan for. It's complicated, poses security risks, and computing technology companies are latching onto the buzzword in droves, but the phenomenon should be taken seriously, said analyst Dave Cearley here at the Gartner Symposium.
Gartner's top trends to watch.
(Credit: Gartner)Specifically, companies should figure out what cloud services might give them value, how to write applications that run on cloud services, and whether they should build their own private clouds that use Internet-style networking technology within a company's firewall.
Cloud computing takes several forms, from the nuts and bolts of Amazon Web Services to the more finished foundation of Google App Engine to the full-on application of Salesforce.com. Companies should figure out what if any of those approaches are most suited to their challenges, Gartner said.
Gartner analyst Carl Claunch
(Credit: Stephen Shankland/CNET)The advice came as part of a talk on top trends coming in 2010 that companies should incorporate into their strategic planning, if not necessarily their own computer systems. The full list of 10: 1. cloud computing; 2. advanced analytics; 3. client computing; 4. IT for green; 5. reshaping the data center; 6. social computing; 7. security--activity monitoring; 8. flash memory; 9. virtualization for availability; and 10. mobile applications.
Second on the list is virtualization--not just in the broad sense of technology that lets a single computer run multiple operating systems simultaneously, where it's become a fixture in data centers, but as a means to keep computing services up and running despite computer failures, said analyst Carl Claunch.
Virtual machines can be moved from one physical machine to another today. Later, by keeping two machines tightly synchronized, a failure in a primary machine can be eased over rapidly by moving the active service to the backup machine, Claunch said.
"We should start seeing this roll out in the next year or two from vendors," he said.
The Gartner hype cycle takes on the PC.
(Credit: Gartner)For PCs, virtualization is arriving, too.
"Think of applications in bubbles," Cearley said. "They can run on client devices or up on a server," with virtualization providing the encapsulation technology to move the work around. The official corporate computing environment can run side by side with employees' home computing environment.
That, along with cloud computing, enables more freedom for people using PCs.
"We're looking at a time when the specific operating system and device options matter a lot less," Cearley said. "You could use a home PC or a Macintosh with a managed corporate image running on that particular device...We see more companies providing a stipend (for) employee-owned PCs."
Make your data center modular.
(Credit: Screenshot by Stephen Shankland/CNET)Another idea: modular data centers. You don't have set up your IT gear in storage containers, but do divide them into pods that each have their own computing, power, and cooling, Claunch said. That makes it easier to pay as you go, to adapt to new technologies, and to increase energy efficiency by partitioning hot hardware from cooler hardware.
Green IT is important--and changing in its nature. It's not just a matter of buying efficient computers, but also of using computers to increase the efficiency of other parts of the business, Cearley said. For example, analytics can improve the efficiency of transportation of goods.
Next comes applications for mobile devices. "That has great potential for creating different experience or stickiness for your customers," Cearley said.
And mobile x86 processors from Intel and AMD could make software development easier, too, he added.
Social networking will happen internally and externally.
(Credit: Gartner)Social-networking applications, broadly defined, also should be on company radar screens. The technology can take the form of internal corporate social networks, interactions with customers, and use of public services such as Facebook and Twitter.
Companies need to get a handle on what's going on--and potentially business purposes such as understanding how the corporate brand is perceived.
"Social network analysis will be moving from a somewhat arcane discipline to a much more mainstream component of your social computing strategy," Cearley said.
ORLANDO, Fla.--Information technology spending is set for a rebound, but not much of one, Gartner said Monday.
Globally, worldwide IT spending should grow 3.3 percent from 2009 to 2010, said Peter Sondergaard, senior vice president of research, in a speech here at the Gartner Symposium. That puts it at about $3.3 trillion.
Even with Gartner's forecast, spending won't return to 2008 levels until 2012, he said. But purveyors of computing technology and services can be forgiven if they take some heart in the news given the gloomy climate.
"The IT market is exiting its worst year ever," Sondergaard said, with spending dropping a projected 5.2 percent from 2008 to 2009. More than half of IT budgets will be the same or smaller in 2010.
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The bad news: first-quarter spending on computing technology was worse than forecast. The good news: growth could resume earlier, according to a report Forrester Research released Tuesday.
The analyst firm reduced its forecast for 2009 information technology spending from a 3 percent decline to a 10.6 percent decline, but it's the hitting bottom, it said. Spending should return to growth in the fourth quarter in the United States, and in the first half of 2010 in Europe and Asia, Forrester said, basing its forecast on newly collected data.
"The big drops are not precursors to further declines," said Andrew Bartels, a principal analyst at Forrester. "Rather, we think they are evidence of a temporary pause in U.S. tech purchases, which we expect to start recovering in the fourth quarter, as businesses realize that they overreacted in the first quarter."
Forrester isn't alone in seeing signs of recovery.
It's "reasonable to be optimistic for 2010," said Google Chief Executive Eric Schmidt last week. And Gartner predicts that PC sales will start picking up in the end of 2009.
For 2009, some sectors are expected to be hit worse than others. Computer equipment spending should drop 13.5 percent, communications equipment's decline should be 12.4 percent, consulting and outsourcing should drop 8.6 percent, and software spending should have the smallest decrease, at 8.2 percent, Forrester projected.
Forrester has reduced its forecasts for 2009 IT spending several times.
(Credit: Forrester Research)As bad as the second half of 2008 treated the PC industry, 2009 is shaping up to be even worse.
PC shipments worldwide will drop 8 percent in the first half of this year, according to a forecast update Thursday to IDC's Worldwide Quarterly PC Tracker. The fourth quarter saw a 1.9 percent decline, driven in large part by large enterprise companies delaying buying replacement PCs during the recession.
But after a rocky start, the industry should turn around a bit by year's end. IDC predicts that shipments will improve over the second half of the year, resulting in small, but positive growth in the fourth quarter, ending with a 4.5 percent decrease for the year. That's a change from the 3.8 percent overall growth for 2009 the company had predicted in early December.
IDC's reasoning that the PC market will have to rebound is because it's driven heavily by replacement cycles, and though companies and individuals may be holding back during this volatile period in the economy, computers don't last forever, especially laptops, whose life spans tend to be shorter than those of desktops.
Though the current economic cycle is bad, it will get better, assures Loren Loverde of IDC. "Pricing will become more aggressive, and there will be further consolidation, but the PC industry will not go the way of the financial or auto industries in this cycle."
What should be more concerning, though, is the plummeting average selling price of those PCs, which is led by an increase in cheap laptops and Netbooks. Prices of PCs sold by Apple, Dell, Lenovo, and Hewlett-Packard dropped 5 percent during the fourth quarter of 2008, which led to an 18 percent drop in revenue for those companies, according to a report also released Thursday by Technology Business Research. But unlike shipments, which have dropped due to current economic factors and are expected to rise again--people will always need to replace their computers--prices aren't likely to rebound.
"The decrease in ASPs is structural and permanent," said TBR PC analyst Ezra Gottheil in a note distributed Thursday. If the industry is to rebound, he says, the most successful PC makers and software providers will figure out how to provide services after sales to increase their currently dwindling profit margins.
This was originally posted at ZDNet's Between the Lines.
Oracle reports its fiscal second-quarter results on Thursday, and analysts are expecting weaker-than-expected license revenue, healthy maintenance subscriptions, a potential earnings miss, and some belt-tightening on deck. In other words, expect a mixed bag.
Wall Street is expecting earnings of 34 cents a share, excluding items and 26 cents a share fully loaded. Revenue is expected to be $5.86 billion, with gross margins of 77.5 percent, according to Thomson Reuters estimates. Analysts expect Oracle to deliver third-quarter earnings of 34 cents a share on revenue of $5.9 billion, but many expect that outlook to be cut.
According to various research reports, Oracle may have had difficulty closing deals in late November. Couple those problems with macroeconomic headwinds and analysis such as that of Oppenheimer's Brad Reback, who expects Oracle to cut costs and its outlook.
Reback reckons that Oracle can cut about $700 million to preserve profit margins without layoffs. Reback has noted that Oracle's headcount has swelled due to acquisitions, but that expenses per employee has remained at the company's historical $150,000 per employee plateau. Why? More international workers at lower pay.
Reback writes:
Given the macro environment, we believe (that Oracle) will have difficulty reaching (second-quarter) guidance and will likely lower revenue expectations Thursday. The question is what happens to margins and (earnings per share). Based on historical expense/employee data, we believe ORCL can cut about $700 (million) of expenses without having to reduce headcount, basically offsetting a (roughly 10 percent) decline in (calendar year 2009) license revenue. The 10 percent is less than half the reduction ORCL saw in 2002. Any further expense actions would likely entail headcount reductions. Note that 6 percent of headcount was cut in (fiscal year 2000), the largest such move over the last decade.
As for the details, Piper Jaffray analyst Mark Murphy is predicting a mixed quarter. In checks with 12 players in Oracle's ecosystem, he called the second quarter a jump ball. Here's what Murphy found:
- Oracle likely closed a $78 million deal in the quarter
- Business is solid among government customers
- Middleware and business intelligence apps are selling well
- Oracle Unbreakable Linux and Oracle OnDemand have minimal uptake
- Oracle is gaining share
- Customers aren't pressuring Oracle on maintenance pricing or renewals
Other analysts echo those points. Pacific Crest analyst Brendan Barnicle adds that the second quarter could have been much worse. Barnicle notes that many Oracle sales representatives missed their targets in the quarter,but quotas were so high that the company may have squeaked out some revenue gains year over year.
Nevertheless, application sales are slipping. Barnicle is expecting 3 percent growth for Oracle's new technology license revenue in the fiscal second quarter and a 10 percent decline in new application licenses.
Add it up, and you have:
- Worries about Oracle's revenue growth (but most expect that earnings will be fine)
- All eyes on the application business
- Solid database and middleware
- Plans to improve operating margins to navigate a downturn and currency fluctuations
One thing is certain: analysts agree that Oracle is much better positioned for a recession than it was last time around.
Correction, 10:46 a.m. PST: This story misstated the day the SIA made its announcement. It is Wednesday.
The Semiconductor Industry Association said Wednesday it is projecting the first decline in global chip sales since 2001.
SIA projects that 2009 sales will decline by 5.6 percent to $246.7 billion before resuming growth in 2010.
The forecast projects sales this year of $261.2 billion, a 2.2 percent increase from sales of $255.6 billion last year. But sales in the fourth quarter, historically a strong time period for the microelectronics industry, are expected to decline by 5.9 percent from the previous quarter, the SIA said.
The near-term prospects reflect comments from Taiwan Semiconductor Manufacturing Company (TSMC)--the largest contract chip manufacturer--at the end of last month and a fourth-quarter warning last week from Intel.
TSMC said that it expects to see a 20 percent drop in revenue in the fourth quarter as the "supply chain"--the myriad companies that order chips from TSMC--reduces "inventory very aggressively."
Intel said revenue will come in "significantly weaker" than expected across all its market segments.
"The current global economic turmoil is clearly having a significant impact on semiconductor sales," said SIA President George Scalise in a statement. "The fortunes of the semiconductor industry are increasingly tied to consumer spending on electronic products. Consumer purchases now drive well over half of worldwide semiconductor sales."
The SIA statement Wednesday cited a recent Deutsche Bank report that estimates personal computer unit sales will decline by 5 percent and cell phone unit sales will decline by 6.4 percent in 2009, with declining sales across all geographic regions. PCs and cell phones together account for approximately 60 percent of worldwide semiconductor consumption.
The semiconductor industry has enjoyed six years of uninterrupted growth since the dot-com collapse in 2001, according to the SIA. "There are few similarities between 2001 and the current conditions," said Scalise.
"The collapse of semiconductor sales in 2001 was driven primarily by the implosion of 'dot.com' industries which resulted in an enormous inventory overhang," he said. "Excess inventory is not an issue today, and the industry is well positioned to resume growth quickly once the current worldwide economic uncertainty subsides," Scalise said.
Sales will grow by 7.4 percent in 2010 to $264.9 billion and by 7.5 percent in 2011 to $284.7 billion, the SIA said.
Electronics and entertainment giant Sony warned investors on Wednesday that its yearly profits will be far below what the company anticipated.
The Japanese company said it expects to record $1.5 billion (150 billion yen) in profit for the current fiscal year, which is a 59 percent drop from the previous year.
Intense competition on LCD TV prices hurt Sony this year.
(Credit: CNET)In July, Sony said it expected to post profits of $2.4 billion, or 240 billion yen.
One of the main culprits has been the increasingly unfavorable yen-to-dollar conversion rate. The company's headquarters are in Tokyo, but the bulk of its business is in the United States and Europe, two areas where the current global economic downturn is being felt the strongest.
While its gaming and movies divisions' upcoming yearly results are in line with expectations, Sony said its consumer electronics business has been hurt by slowing sales of televisions and cameras, according to The Associated Press. The rapidly falling prices in the broader flat-panel TV industry are also to blame, Sony said.
The company is due to report its fourth-quarter and yearly earnings next Wednesday. For the quarter, Sony expects to record $215.2 million (21 billion yen) in profit, a 72 percent decrease from a year ago, and sales of $21.2 billion (2.07 trillion yen), a 1 percent decrease.
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