Goldman Sachs' latest IT spending survey is out and it looks a tech-spending recovery is on the way for 2010. To a large extent, the data suggests not so much that spending is dramatically higher, but that it has normalized at pre-recessionary growth rates, rather than contracting as it has over the past several months.
Goldman is cautiously optimistic about 2010 spending, noting that much of it depends on the macro-economic environment driving more business spending. And while most areas will see growth counter to 2009's downward spiral, some areas such as off-shore development will feel significant retraction.
Regardless, the sentiments are positive and dramatically different than Goldman's report from November 2008 where IT spending was in a total death spiral. What a difference a year makes.
A few key points from the report:
- With recessionary buying cycle clearly through the trough, the remaining question centers on the pace of recovery for 2010.
- Infrastructure, application development, and systems integration remain top spending areas, especially as CIOs start to consider newer technologies such as virtualization and cloud computing.
- There is pent-up demand in hardware most notable, positive for storage and server/PC refresh.
- The appetite for offshore services appears to be below trend at current levels.
- HP, NetApp, CommVault, Red Hat, Riverbed, and Salesforce.com are notable names showing positive upward momentum in our latest survey.
In software, Red Hat and Salesforce.com showed strengthened results with VMware and Citrix remaining top of mind, which Goldman believes to be a good indication of internal and external cloud deployments gaining momentum.
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The Nintendo Wii remains a force to be reckoned with in the video game world and new survey statistics along with new revenue streams suggest that Nintendo has still has something up it's sleeve.
New survey data from Lottay, an online wish-list and gift giving site, shows that the Wii and its associated accessories will regain momentum during this year's holiday season.
The Wii and Wii-related gear were wished for twice as much as the Sony PS3 and Xbox 360 combined though 38 percent of people wanted something other than products--namely cash, and in one case, Satan (I assume for a visit, not as a full-time family member.)
And while a wish, or a request for a gift, is no guarantee that a product will actually sell, there is a dearth of exciting gifts for this holiday season, leaving room for the Wii and other less-new products to be successful.
Just a few weeks ago, Electronic Arts CEO John Riccitiello commented that the "Wii platform has been a little weaker than we had anticipated" but Nintendo of America's executive vice president of sales and marketing Cammie Dunaway was extremely positive about the current sales and the future growth.
But, the focus in the U.S. remains on selling more titles and accessories, not branching out into additional services such as we've seen with Microsoft's Xbox Live, which provides access to Facebook, Twitter, and Last.fm through the console.
Services supporting the Wii are much more sophisticated in Nintendo's home country of Japan, where the company previously launched an advertising program to turn family time into a commercial endeavor and a catering channel that lets users order food from a variety of vendors directly through the console, delivered directly to their front door.
This weekend Nintendo added to the Wii's variety of interactive offerings, with a paid video download service for Japan. "Theater no Ma" will offer a range of movies, anime and other paid content from providers including Walt Disney and Sesame Workshop.
Downloading rental content onto game consoles and set-top boxes has been common in the U.S for awhile, but the reason this service could prove meaningful in Japan is because Nintendo researchers previously found that 87 percent of Wii users use the console on the biggest screen in the house, which is still the one in the living room.
Gamers are not just making purchases to enhance their gaming experience but also selling virtual assets to other players, according to new research from video game market research firm VGMarket.
Sales of virtual goods are expected to reach $1 billion this year and already generate near $4 billion annually in China. But there are some challenges, primarily the fact that once you convert your real money to virtual cash you can't readily get the dough back out.
The research revealed that in-game currency is the most frequently sold digital good from player to player and that two out of three sellers sold in-game currency in the last 12 months, earning a median of $22. PlaySpan, a provider of monetization and payment solutions for games and virtual worlds and sponsor of the research, considers that to be good news as its platform enables game developers to provide player to player marketplaces for their players. In addition, the PlaySpan Marketplace currently provides a secondary market for IMVU players to buy and sell goods as well.
One out of two sellers made a sale in a social network game over the last 12 months and earned a median of $50, while one out of four sellers made a sale in a free-to-play game over the last 12 months, with their median earning being $98, or nearly double that on social networks.
Eric Hartness, chief marketing officer at PlaySpan, told me that the secondary market is a boon for games, adding value, real and perceived, to all players by associating a real world dollar value on their playing time, game accounts, and digital items.
... Read moreThings are getting better for entrepreneurs, according to data released Tuesday by information services provider Chubby Brain.
Venture investment hit a multi-year low in the first quarter of 2009, reaching $5.3 billion in the second quarter and jumping a respectable 14 percent to $6.1 billion in the third quarter of 2009.
Statistics in The Pulse of the Innovation Economy report for Q309 certainly help quantify a resurgence in Silicon Valley, but we can't forget that entrepreneurs drive innovation, while venture capitalists facilitate it. Yes, money is often necessary, but the entrepreneurial need to solve complex problems is what has propelled the information economy.
A few highlights:
- Invested dollars went up by 14 percent, with an 11 percent increase in number of deals
- September seemed to be right time to raise money with 40 percent of third-quarter deals occurring in the month
- California, and specifically the San Francisco Bay Area and Silicon Valley is the most likely location to raise money.
- Health care investing saw the most activity while green investors sat on their recycling cans
It should come as no surprise that the San Francisco Bay Area/Silicon Valley is responsible for a large portion of third-quarter funding, taking 7 of the top 10 ranking spots. This is not a knock against other geographies, just a realistic recognition of how densely packed the valley is with VCs.
... Read moreNew data from IDC's Cloud Services Forecast shows that cloud services will outpace traditional IT spending over the next five years and will represent $44.2 billion, or roughly 10 percent, of all IT spending by 2013.
However, the missing link in this data set is that these numbers account only for IDC's cloud services taxonomy (Application Software, Application Development and Deployment Software, Systems Infrastructure Software, and Server and Disk Storage capacity) and don't represent private clouds.
Private clouds--or at least internal enterprise applications that use the same principles--will undoubtedly become a major trend over the next five years. In addition to the cost savings of using existing compute power, the ease of use of cloud APIs will work their way into the enterprise quickly, now that developers are comfortable with public cloud services like Amazon S3 and EC2.
If public cloud services will be 10 percent of all IT money spent, that represents a blisteringly fast growth rate. And while we certainly don't wish the recession to continue, it's interesting to see how companies have adapted their IT plans to take advantage of services that require far less capital expenditure. From IDC:
The five-year growth outlook remains strong, with a five-year annual growth rate of 26 percent--over six times the rate of traditional IT offerings. In spite of the challenging economy--or more accurately, because of it--this growth rate advantage expanded from last year's forecast, in which cloud services were forecast to grow at over five times traditional offerings.
There is no question that cloud services are in their infancy and that the market is ripe for further disruption. The challenge going forward will be to accurately measure just what applications and services are internal, external, cloud, or otherwise.
In the meantime, let's all just be glad to see IT spending on the rise.
IBM on Tuesday announced that Canada's Edmonton Police Service is using IBM business analytics technology to help reduce crime, improve force effectiveness, and increase public safety.
The goal of the software is to help law enforcement agencies "obtain the right information at the right time--even before a crime may have been committed--to inform police officers so they can stay on top of and prevent criminal activities, identify crime 'hot spots,' and ultimately reduce crime rates."
With business analytics technology, Edmonton police are able to see data in near-real time. They put crime information directly into the hands of front-line patrol officers so they can use it to quickly identify problems, associated trends, and locations of crimes to determine their response and problem-solving solutions.
The police service has also been able to look at the components of response times--such as dispatch delays and travel time--to identify the issues that play a role in overall response time. With this technology, police are able to monitor performance strategically over time and place, and tactically on a day-by-day and call-by-call basis.
Crime data analysis has been a challenge in the past, as law enforcement and government agencies are only recently making the transition from paper to computer-based records. The quick access to relevant information potentially helps officials work smarter and make more timely decisions about crime fighting.
The use of analytics to improve decision making is certainly nothing new in the enterprise. Other industries such as professional sports jumped on the analytics bandwagon several years ago in order to create specific game plans based on teams and players. It's good to see an industry modernize--especially one that's responsible for public safety.
A Swedish organization called the Youth Care Foundation claims that computer gaming addiction is reaching pandemic proportions around the world. This is the same group that called World of Warcraft "the cocaine of the computer games world" back in February.
In an interview with Sweden's English paper, The Local, Sven Rollenhagen of the Youth Care Foundation touts his position as one that helps young people in Sweden recognize and manage computer gaming addiction.
Already ahead of the curve by "daring" to view gaming addiction as something distinct from other common problems facing young people, Sweden's Youth Care Foundation has put the country on the map as a leader in developing strategies for coping with the issue.
"Sweden has long been at the forefront of efforts to battle addiction," he said, adding that there are very few, if any, experts elsewhere in the world who have dedicated their work completely to the study and management of gaming addiction.
Obviously addiction should be taken seriously, but to suggest that we risk a pandemic of strung-out child gamers is just ridiculous. As it turns out, parents can turn off or simply take the games out of the kids hands, thwarting the game-play demons.
"If you extrapolate from the number of calls we received or simply from the millions of games that are sold around the world each year, you start to see how big the pool of potential addicts is," he said.
Extrapolating data is a tried and true tactic to conflate statistics, and in fact has provided plot-lines for both the Simpsons and Family Guy. It's also part of the renewed FCC investigation into Janet Jackson's 2004 Superbowl wardrobe malfunction wherein the number of complaints was extrapolated in order to prove a point, rather than provide a true statistical analysis.
I'd write some more but I have to get through the WoW Burning Steppes before a Blood Elf steals my gold.
Follow me on Twitter @daveofdoom.
New research from video game market research firm VGMarket sponsored by Playspan reveals that gamers are actively making purchases to enhance their gaming experience, with free-to-play games leading the way to monetization. Playspan is a provider of monetization and payment solutions for games and virtual worlds.
Three out of four virtual goods buyers purchased in-game currency in the last 12 months and spent approximately $50 each. This statistic is interesting to me as I am always surprised when users buy in to currency that only works on one site. But, I suppose if it's the only option then you will eventually give in.
Of further interest in the report is the fact that free-to-play games may actually be monetizing better than MMOs (massive multiplayer online games) and social networks.
- 58 percent made purchases in free-to-play (F2P) games over the last 12 months.
- 34 percent made purchases in MMOs.
- 23 percent made purchases in social network games.
- The average respondent is currently playing three online games and 80 percent report buying digital goods for their own use while 20 percent said they purchase for gifts.
New data from The Nielsen Company reflects some interesting new trends related to both the worldwide recession and the somewhat incongruous growth of Web browsing on mobile phones. In a nutshell, users are looking for mobile phone services, food and cooking sites, and coupons, all of which make perfect sense in today's economy.
Web sites related to mobile phones--both handsets and services--showed the highest traffic growth in the UK posting 58 percent growth on a year-to-year basis. According to Nielsen:
Visits to Nokia's site grew by 203 percent, while Vodafone and O2 also posted solid growth (91 percent and 79 percent, respectively). At the same time, schemes that enable consumers to recycle their old mobiles for cash drove more people to related Web sites for information.
Food and cooking sites (as well as television programming) have taken the place of real estate and home design obsessions as people look for comfort that's accessible on a lower budget than property or remodeling.
And, of course, promotional and coupon sites remain major themes as we all look to get more bang for the buck.
Of interest is the fact that much of the traffic to these sites is driven by specific marketing program, several of which contain social aspects, such as Coca-Cola's "Coke Zone," which offers rewards and prizes by collecting points from specially-marked bottles that can be redeemed online.
From a branding perspective this is good news as companies can tie in programs with online properties that are significantly easier and less expensive to maintain. And, the valuable data they get from consumer behavior can more readily be put to good use once users actions are able to be tracked in a consistent manner.
Follow me on Twitter @daveofdoom.
According to the study, "12% of the overall population surveyed reported that they had bought virtual goods in the last 12 months. However, a closer look at the digital entertainment habits of virtual goods buyers reveals that virtual world visitors are the heaviest virtual goods buyers, with 46% of these consumers buying virtual goods (from virtual worlds, games or social networks) and nearly one third of iPhone owners buying from the same platforms."
Virtual world users, social gamers, and iPhone owners all made more purchases than hardcore gamers, which suggests that casual players are likely more comfortable spending money on goods as the games they play are generally free.
Key points from the survey results:
- 12 percent of Americans spent an average of $30 last year on virtual goods purchases, with 15 percent of those who made purchases saying they spent at least $100 or more.
- Females ages 25-34 represent the largest demographic of those who made purchases (17 percent).
- Of those surveyed, Asian Americans represent the largest ethnic segment (16 percent), followed by Latinos (14 percent), Caucasians (12 percent), and African Americans (10 percent)
- 46 percent of those who've made purchases are virtual world users, with nearly 30 percent coming from iPhone users.
Sustainable revenue from virtual goods is not a foregone conclusion, but the options for monetizing goods are growing and providing new possibilities.
Follow me on Twitter @daveofdoom.
