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Monday, April 24, 2017

Cloud Object Storage: Another Race to the Bottom?

Just when industry analysts were starting to believe that the buyers of cloud computing services were motivated more by upside business opportunity, and less by cutting IT infrastructure costs, a new price war has erupted that's driven yet another vendor race to the bottom.

In its latest analysis of cloud computing services, 451 Research revealed that the cloud price battlefield has shifted from virtual machines (VMs) to cloud object storage. The analyst firm predicts that other services -- particularly databases -- will undergo the same pricing pressures over the next 18 months.

Cloud Services Market Development

Until recently, the prices of cloud related services beyond compute held steady in the face of intense vendor competition, according to the latest market study by 451 Research. Virtual machines have been the traditional battleground for price cuts, as providers have sought to gain attention and differentiation.

The tide has now turned, with cloud object storage pricing declining in every region, including a drop of 14 percent over the past 12 months. For comparison, the cloud mainstay of VMs has dropped a relatively small 5 percent over the same period.

Analysts believe market maturity is leading to cloud service price cuts moving beyond compute. Other factors include increasing cloud-native development and faith in the cloud model, as well as a competitive scrum to capture data migrating away from legacy on-premises IT infrastructure.

While some in the industry have speculated that public cloud service providers have been using cheap VMs as loss-leaders in their product portfolios, 451 Research finds that, even in the worst case, profit margins for VMs are at least 30 percent.

According to the 451 assessment, there's no justification to believe that cloud computing is anywhere near a commodity, just yet. Analysts believe the cloud market is not highly price sensitive at this time, although naturally, end users want to make sure they are paying a reasonable price.

"The big cloud providers appear to be playing an aggressive game of tit for tat, cutting object storage prices to avoid standing out as expensive," said Jean Atelsek, analyst at 451 Research.

Outlook for More Cloud Price Cuts

This is the first time there has been a big price war outside compute, and it reflects the fact that cloud object storage has moved into the mainstream. While price cuts are good news for cloud buyers, they are now faced with a new level of complexity when comparing service providers.

The cloud storage battle started in the third quarter of 2016, when 451 Research identified a reduction in the IBM SoftLayer (now part of Bluemix) cloud object storage prices. Google, AWS and then Microsoft followed suit, with price cuts as well.

The 451 Research Digital Economics Unit predicts that prices for virtual machines and cloud object storage will continue to come down, with relational databases likely to be the next competitive battle front.

Friday, April 21, 2017

IoT Packaged Solutions and Services Market Momentum

Nearly all segments of the Internet of Things (IoT) market recorded double-digit growth in the fourth quarter of 2016 (4Q16), driving an overall 19.3 percent year-to-year revenue gain to $8.2 billion, according to the latest study by Technology Business Research (TBR).

This market is still evolving. "We expect growth to continue apace as more customers undertake implementations due to the emergence of packaged use cases, standards are adopted and pricing models become more rationalized," said Daniel Callahan, analyst at TBR.

Cloud services was the fastest-growing segment, at 63.5 percent year-to-year as customers increasingly adopted centralized analytics, storage and other intensive computing applications -- such as artificial intelligence (AI) and machine learning.

IoT Solution and Services Market Development

However, despite its growing popularity and market mind-share, cloud services accounted for only a small portion of the total. Software remains a giant part of the IoT market and a sizable portion of the IT vendor's revenue.

According to the TBR assessment, this is due to a large number of legacy implementations and the reality that many customers have not signed on to the costly data transport and compute power necessary when starting on the cloud, focusing on edge instead. In most cases, customers are beginning with experimental implementations on the edge, leveraging software and only moving to the cloud when the ROI is proven.

The experimentation on the edge and the necessity of Hybrid IoT -- the combination of edge and centralized cloud capabilities -- are also delivering ICT infrastructure a more permanent position in the IoT stack, rather than it being a victim of cloud-based IaaS. The ICT infrastructure segment grew 6.6 percent year-to-year in 4Q16 to 10.3 percent of total revenue.

IT services grew 13.5 percent year-to-year in 4Q16 and remains a crucial component of the IoT market due to the necessity of build, run and training services in IoT. However, TBR noted that IT services revenue growth decelerated from 15.2 percent year-to-year in 2Q16.


TBR believes IT services will increasingly be the victim as more prepackaged, low configuration IoT solutions emerge and as AI takes over much of the run aspect.

That said, business consulting grew 28.6 percent year-to-year. TBR reports that business consulting will be less impacted by standardization, prepackaged solutions and AI due to the complex knowledge and creativity necessary to guide transformation.

The security and connectivity segments, necessary aspects of an IoT solution, grew 28.2 percent and 16 percent year-to-year, respectively. Both of these segment's revenues scale extremely close to IoT adoption -- as more devices and sensors are deployed by customers the more security and connectivity are required.

Based upon revenue, the top three vendors were IBM, Microsoft and Cisco. These vendors, which registered nearly $2.4 billion combined, led the market for numerous reasons, including:

  • They are market leaders in defining and acting on an IoT go-to-market strategy and did not hesitate on investing in M&A activity to build advanced capabilities, including in AI, machine learning, platform infrastructure and vertical expertise.
  • Each chooses to brand themselves as, or act as through partnerships, a full-service or multi-line vendor. This simplifies customer interaction, an extremely important tenet in IoT, and increases the ability for the vendors to cross-pollinate.
  • All three have a deep-rooted presence in the enterprise, large legacy customer bases and brand awareness for market-leading technology. All have wide partner networks.

Thursday, April 20, 2017

An Uncertain Future for the PC Market Lingers in 2017

Worldwide personal computer (PC) shipments totaled 62.2 million units in the first quarter of 2017 -- that's a 2.4 percent decline from the first quarter of 2016, according to the latest market study by Gartner. Moreover, it's the first time since 2007 that shipments fell below 63 million units in one quarter.

That said, the PC industry experienced modest growth in the business market, but this was offset by declining consumer demand. Some people will refrain from replacing older PCs, and others have abandoned the PC market altogether. Gartner's study did not include Chromebooks, which are in greater demand.

Regardless, Garner has emphasized that the business segment of the market still considers the PC as an important device, and it's the main work computer device for many businesses.

Personal Computer Market Development

"While the consumer market will continue to shrink, maintaining a strong position in the business market will be critical to keep sustainable growth in the PC market. Winners in the business segment will ultimately be the survivors in this shrinking market," said Mikako Kitagawa, principal analyst at Gartner.

According to the Gartner assessment, vendors who do not have a strong presence in the business market will encounter major problems, and they will be forced to exit the PC market in the next five years. However, there will also be specialized niche players with purpose-built PCs, such as gaming PCs and ruggedized laptops.

The PC industry is also experiencing a price increase. Over two years ago, the price hike was attributed to the local currency deterioration against the U.S. dollar. This time around, the price hike is due to a component shortage.

DRAM prices have doubled since the middle of 2016, and SSD has been in short supply as well. The price hike will suppress PC demand even further in the consumer market, discouraging buyers away from PC purchases unless it is absolutely necessary. The price hike started affecting the market in 1Q17.

In the U.S., PC shipments totaled 12.3 million units in the first quarter of 2017 -- that's a 2.4 percent decline from the first quarter of 2016. The U.S. market has experienced a modest decline for two quarters. Much of the decline is attributed to the weak consumer market.

Global Outlook for Personal Computers

PC shipments in EMEA totaled 17.9 million units in the first quarter of 2017 -- that's a 6.9 percent decline year over year. All major regions in EMEA experienced a decline in the first quarter. However, Russia saw single-digit PC growth, which was attributed to stabilization of the local economy.

Gartner reports that the Asia-Pacific market demonstrated some stabilization, as PC shipments totaled 22.8 million units in the first quarter of 2017 -- that's a 0.8 percent decline from the first quarter of 2016. PC spending in China began to show a modest recovery. Steady economic conditions were an influencing factor driving a PC refresh.

Wednesday, April 19, 2017

Contactless Payments will Reach 500 Million Users

Contactless payment cards offer an array of benefits to both the retailer and consumer, such as faster throughput at the Point of Sale (POS) terminal, potentially leading to increased sales and reduced operating costs from cash handling.

However, to succeed the contactless card needs the attendant payment infrastructure to be upgraded to support contactless transactions, thus requiring co-operation from the various stakeholders in retail payments.

Contactless Payment  Market Development

According to the latest market study by Juniper Research, the number of OEM-Pay contactless users -- including Apple Pay, Samsung Pay, and Android Pay -- will exceed 100 million for the first time during the first half of 2017, before surpassing 150 million by the end of this year.

The combined market share of Apple, Samsung, and Google (via Android Pay), increased from 20 percent in 2015 to 41 percent in 2016, as a proportion of total mobile contactless payment users. Juniper forecasts that this will rise to 56 percent by 2021, as the trio’s combined user base exceeds 500 million.


The research found that Apple Pay and the alternative wallets are set to establish themselves as the primary contactless mechanisms of choice in the U.S. market. However, the challenge facing Apple and its rivals is to ensure that the infrastructure is in place for consumers to make in-store payments.

"We believe that as contactless usage gains traction and consumers or merchants recognize the speed and convenience it offers, then, as in European markets, there will be a further and significant increase in availability at the point-of-sale," said Nitin Bhas, head of research at Juniper Research.

Contactless Payments Growth Outlook

According to Apple, the proportion of U.S. retailers supporting Apple Pay rose from 4 percent in 2014 to 35 percent in late 2016. Plus, the future growth outlook is bright.

The research found that 2015 and 2016 were both watershed years for Host Card Emulation (HCE) in terms of commercial service deployments. Juniper estimates that at least 194 banks had introduced such services by the end of 2016.

Juniper expects that PayPal, already near ubiquitous in the online space, will likely deploy a portfolio of contactless payment and loyalty solutions that will allow it to compete effectively for market share.

Tuesday, April 18, 2017

Financial Service RegTech Revenue will Reach $6.45B

Agile regulation technology (RegTech) solutions are in high demand in the global financial services industry. Financial service organizations are embracing RegTech solutions for enhanced efficiency, proactive compliance, real-time risk monitoring and improved governance.

Collaboration with RegTech solution providers will be key for financial service organizations to gain a better return on investment, mitigate implementation and complex IT infrastructure barriers, and enable quicker conversion to dynamically evolving regulatory changes.

The RegTech solutions market is expected to reach $6.45 billion by 2020, growing at a compound annual growth rate (CAGR) of 76.1 percent by 2020, according to the latest market study by Frost & Sullivan.

"A rising demand for easy-to-use, regulatory-compliant solutions for anti-money laundering (AML) and know-your-customer (KYC) requirements are steering RegTech start-ups to enter these segments and -- with the help of cloud computing, big data analytics and machine learning technologies -- provide innovative, affordable and effective solutions," said Dhanvin Sudarsan, research analyst at Frost & Sullivan.

Venture capital firms are actively investing in innovative RegTech companies that provide cutting-edge solutions. Regtech companies active in the financial service sector include:
  • FundApps, which offers a software-as-a-service (SaaS) platform that delivers a cloud-based, managed service to automate shareholding disclosure by organizing regulatory information, and combining regulatory compliance content and technology.
  • AQMetrics, a cloud-based platform that offers an effective, innovative, and simplified solution to address regulatory risk and compliance issues.
  • Scaled Risk, which integrates in-memory analytics and big data to provide real-time, scalable, and flexible risk management solutions for banks and other financial services companies.
  • Onfido, which leverages machine learning to provide next-generation background checks for banks and business for their KYC, AML, and credit risk checks.
  • Qumram, which provides a fully transparent and compliant digital audit trail of online, mobile, and social interactions. Every interaction is recorded and can be played on request without any technical assistance. This aids the digital compliance of financial organizations.

"While technology adoption and regulatory compliance are clearly the way forward for financial service organizations, complex data verification, costly legacy systems, uncertainty in upcoming regulatory reporting, and conflicting data sets are factors hindering RegTech market growth," concluded Dhanvin.

Collaborative strategies will empower new digital growth opportunities and swift adaption to a dynamically evolving ecosystem, said the Frost & Sullivan Digital Transformation team. There's a significant upside for the adoption of emerging applications for cognitive systems and blockchain technologies within this sector.

Monday, April 17, 2017

China Leads the Growth of Global Robotics Adoption

Across the globe, the development and practical application of robotic technology has gained momentum during the last decade. While it's true that automation is typically applied to lower costs and improve productivity, new and emerging use cases will drive demand.

Investment in robotic systems and related services will more than double in China, growing from $24.6 billion in 2016 to $59.4 billion in 2020, according to the latest market study by International Data Corporation (IDC).

Robotic Systems Market Developement

"China continues to lead the growth of worldwide robotics adoption, primarily driven by strong spending growth in process manufacturing and cross-industry applications," says Dr. Jing Bing Zhang, research director at IDC. "In China, we are also seeing an accelerated growth in the adoption of commercial service robots especially for automated material handling in factories, warehouses and logistics facilities.


China is the single largest and the fastest growing robotics market in the world, and will account for more than 30 percent of the worldwide robotics spending in 2020.

According to the IDC assessment, manufacturing continues to dominate China's investment in robotics, with discrete and process manufacturing accounting for over 50 percent of spending in 2016.

From a technology perspective, China spending on robotic systems -- which includes industrial, service and consumer robots and after-market robotic hardware -- is expected to reach $29 billion in 2020.

Services-related spending, which encompasses application management, education and training, hardware deployment, system integration, and consulting, will grow to over $15.8 billion in 2020.

Robotics Market Research Resource

The IDC Worldwide Commercial Robotics Spending Guide quantifies the robotics opportunity from a region, industry, use case, and technology perspective.

Spending data is available for more than 52 use cases across 13 key industries in eight regions. Data is also available for a wide range of robotics hardware, software, and services categories. The detailed segmentation and timely, global data is designed to help vendors targeting the market to identify opportunities and execute an effective strategy.

Friday, April 14, 2017

5G Mobile Network Deployment Creates New Challenge

Wireless communications and mobile internet access over cellular networks continue to be an essential component of next-generation telecommunication system enhancements. While deployments of 4G network technologies are still occurring across the globe, plans are underway for 5G.

That being said, 5G deployments indoors and in venues may be delayed by one year or more, when compared to outdoor 5G deployments starting from 2020. ABI Research estimates the global equipment market for in-building wireless -- including active distributed antenna systems (DAS), passive DAS, and repeaters -- will reach close to $10 billion by 2025.

5G Wireless Infrastructure Market Development

The overall system revenue in 2025, which includes services and equipment, will grow at a CAGR of 15 percent to reach $19 billion in 2025. Out of this market, 5G in-building wireless equipment will account for $509 million in 2025.

"As 5G nears full specification, mobile network operators will face challenges for indoor mobile coverage, including signal propagation, next-generation fronthaul or backhaul, and massive MIMO," says Nick Marshall, research director at ABI Research.

According to the ABI assessment, early 5G deployments indoors and in venues will be a migration building on the features of 4G LTE-Advanced and 4G LTE-Advanced Pro. This will happen technology by technology and frequency by frequency, avoiding costly total equipment replacements.

5G is a multi-technology HetNet, comprised of a combination of different cell types and access technologies to seamlessly adapt to an array of use cases and applications.

Network functions virtualization (NFV) migrates cellular signal processing to a remote telco data center, while mobile edge computing (MEC), in a countervailing trend, migrates IT compute and storage to the network edge within the building or venue for low latency use cases and applications.

Massive MIMO, a key challenge that 5G will face as it nears full specification, refers to the use of multiple antennas at the base station and mobile device.

Outlook for 5G Mobile Network Technologies

"We believe that future 5G networks will rely on NFV and MEC to alter the architecture and topology of the RAN by leveraging telco data centers to virtualize signal processing in the cloud," concludes Marshall.

With 5G standards yet to be finalized, many equipment vendors are actively researching and developing 5G equipment with a variety of approaches. These companies include Nokia with its AirFrame/AirScale Radio Access, Ericsson with its ERS, and CommScope with its OneCell.

Thursday, April 13, 2017

Cloud Infrastructure Revenue Reached $32.6B in 2016

Cloud computing adoption continues to disrupt the traditional IT infrastructure marketplace, as more CIOs and CTOs execute their ongoing plans for digital business transformation. While some regional expansions have tapered off, there are still many significant upside opportunities.

According to the latest worldwide market study by International Data Corporation (IDC), vendor revenue from sales of infrastructure products -- server, storage, and Ethernet switches -- for cloud IT (including public and private cloud) grew by 9.2 percent year-over-year to $32.6 billion in 2016, with vendor revenue for the fourth quarter (4Q16) growing at 7.3 percent to $9.2 billion.

Cloud IT infrastructure sales as a share of overall worldwide IT spending climbed to 37.2 percent in 4Q16 -- that's up from 33.4 percent a year ago. Revenue from infrastructure sales to private cloud grew by 10.2 percent to $3.8 billion, and to public cloud by 5.3 percent to $5.4 billion.

Cloud Computing Market Development

In comparison, revenue in the traditional (non-cloud) IT infrastructure segment decreased 9 percent year-over-year in the fourth quarter of 2016.

Private cloud infrastructure growth was led by Ethernet switch at 52.7 percent year-over-year growth, followed by server at 9.3 percent, and storage at 3.6 percent.

Public cloud growth was also led by Ethernet switch at 30 percent year-over-year growth, followed by server at 2.4 percent and a 2.1 percent decline in storage.

In traditional IT deployments, storage declined the most (10.8 percent year-over-year), with Ethernet switch and server declining 3.4 percent and 9 percent, respectively.

"Growth slowed to single digits in 2016 in the cloud IT infrastructure market as hyperscale cloud data center growth continued its pause," said Kuba Stolarski, research director at IDC.

According to the IDC assessment, network upgrades continue to be the focus of public cloud deployments, as network bandwidth has become by far the largest bottleneck in cloud data centers that rely upon a distributed systems architecture.

After some delays for a few hyperscalers, data center expansion and refresh are expected to blossom throughout 2017, built on newer generation hardware -- primarily using a server acceleration architecture.

Regional Outlook for Cloud Computing

From a regional perspective, vendor revenue from cloud IT infrastructure sales grew fastest in Japan at 42.3 percent year-over-year in 4Q16, followed by Middle East & Africa at 33.6 percent, Canada at 16.6 percent, Western Europe at 15.6 percent, Asia-Pacific (excluding Japan) at 14.5 percent, Central and Eastern Europe at 11.6 percent, Latin America at 9.9 percent, and the United States at just 0.1 percent.

Note: IDC defines cloud services more formally through a checklist of key attributes that an offering must manifest to end users of the service. Public cloud services are shared among unrelated enterprises and consumers; open to a largely unrestricted universe of potential users; and designed for a market, not a single enterprise.

Wednesday, April 12, 2017

Worldwide IT Revenue will Reach $3.5 Trillion in 2017

Business technology trends across the hardware, software, services and telecom markets have evolved as more enterprise procurement is driven by senior executives that are leading their organization's digital transformation agenda.

Worldwide IT spending is projected to total $3.5 trillion in 2017 -- that's a 1.4 percent increase from 2016, according to the latest market study by Gartner. That said, this growth rate is down from the previous quarter's forecast of 2.7 percent, due in part to the rising value of the U.S. dollar.

"The strong U.S. dollar has cut $67 billion out of our 2017 IT spending forecast," said John-David Lovelock, research vice president at Gartner. "We expect these currency headwinds to be a drag on earnings of U.S.-based multinational IT vendors through 2017."

Worldwide IT Market Development

According to the Gartner assessment, global IT and business executives have been seeking information and guidance on market opportunities and challenges, with the intent to base their critical investment decisions on proven methodologies.

Case in point: the data center system market segment is expected to grow 0.3 percent in 2017. While this is up from negative growth in 2016, the segment is experiencing a slowdown in the server market.

"We are seeing a shift in who is buying servers and who they are buying them from," said Mr. Lovelock. "Enterprises are moving away from buying servers from the traditional vendors and instead renting server power in the cloud. This has created a reduction in spending on servers which is impacting the overall data center system segment."


Driven by strength in mobile phone sales and smaller improvements in sales of printers, PCs and media tablets, worldwide spending on devices is projected to grow by 1.7 percent in 2017, to reach $645 billion.

This is up from negative 2.6 percent growth in 2016. Mobile phone growth in 2017 will be driven by increased average selling prices (ASPs) for phones in emerging Asia-Pacific and China, together with iPhone replacements and the 10th anniversary of the iPhone.

The media tablet market continues to decline significantly, as replacement cycles remain extended and both sales and ownership of desktop PCs and laptops are negative throughout the forecast period. Throughout 2017, business Windows 10 upgrades should provide underlying growth, although increased component costs will see PC prices increase.

Outlook for IT Services Spending

The 2017 worldwide IT services market is forecast to grow 2.3 percent in 2017, which is down from the 3.6 percent growth in 2016. Gartner reports that the modest changes to the IT services forecast this quarter can be characterized as adjustments to particular geographies as a result of potential changes of direction anticipated regarding U.S. policy -- both foreign and domestic.

The business-friendly policies of the new U.S. federal government administration are expected to have a slightly positive impact on the American implementation services market, as the government agencies are expected to significantly increase their IT infrastructure spending during the next few years.

Tuesday, April 11, 2017

Chatbots on Mobiles will Reach 2 Billion Apps by 2021

Mobile messaging today encompasses both the more traditional forms of messaging and the popular Over The Top (OTT) messaging services from providers such as WhatsApp and WeChat. Communication has never been so rapid or efficient, with new technologies and apps driving demand.

One of the key developments has been the growth of OTT mobile messaging services. Where Mobile Network Operators (MNOs) once saw a good portion of revenue come from SMS, MMS and voice calls, OTT players have offered people a free option -- in the form of messages which can be sent over Wi-Fi or Internet connections, driving demand away from mobile operator networks.

OTT Messaging Market Development

Juniper Research forecasts that OTT messaging applications -- such as WhatsApp and WeChat -- will see adoption grow from 2.3 billion unique users in 2016 to 4.2 billion by 2021, representing a growth of over 12 percent compound annual growth rate (CAGR).

According to the Juniper assessment, the OTT vendors will begin focusing their strategies around the development and provision of artificial intelligence (AI) chatbot applications.

The new market study uncovered that mobile service providers must view the introduction of chatbots as an opportunity to expand their in-app offerings, beyond a mere messaging service.


Juniper predicts that OTT vendors will re-position their messaging platforms as customer relationship management tools. By leveraging AI technology, these OTT apps will offer a high value proposition by creating a new level of consumer engagement.

For end-customers, these platforms offer an attractive means of engagement by allowing for greater consumer flexibility and minimizing call wait times.

Juniper analysts believe that chatbot launches on OTT messaging apps will provide a wealth of opportunities for the eRetail and banking sector over the next 5 years. Frequently used services such as balance checking and regular purchases will be some of the early uses.

Outlook for Mobile Chatbot Applications

Juniper forecasts that the number of chatbots on mobile devices will exceed 2 billion globally by 2021, as western players aim to emulate the success of chatbots in China.

Chatbot user numbers in the west will grow at over 190 percent CAGR by 2021, rivalling China. Moreover, established brand names -- such as Amazon and eBay -- will likely play a vital role in building consumer trust in the technology.

"Successful chatbots will increase audience engagement, maintain customer satisfaction and generate repeat business. OTT players must ensure they support these chatbots in their applications, or risk user churn to competitors," said Sam Barker, research analyst at Juniper Research.