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Friday, February 24, 2017

Digital Growth Spending will Reach $2 Trillion in 2020

Worldwide spending on digital transformation (DX) technologies will reach more than $1.2 trillion in 2017 -- that's an increase of 17.8 percent over 2016, according to the latest market study by International Data Corporation (IDC).

IDC expects overall digital growth spending to maintain this pace with a CAGR of 17.9 percent over the 2015 to 2020 forecast period -- eventually reaching an impressive $2 trillion in 2020.

Digital Transformation Market Development

"Changing competitive landscapes are disrupting businesses and creating an imperative to invest in digital technologies, unleashing the power of information across the enterprise and thereby improving the customer experience," said Eileen Smith, program director at IDC.

In 2017, global organizations will invest $1.2 trillion on digital transformation projects with discrete and process manufacturers contributing almost 30 percent of this spending, while the fastest growth will come from the retail, healthcare, insurance, and banking sectors.

The categories that will see the greatest DX spending in 2017 are connectivity services, IT services, and application development & deployment (AD&D). Combined, these categories will account for nearly half of all DX spending this year.

However, investments in these categories will vary considerably from industry to industry. The discrete and process manufacturing industries will invest roughly 20 percent of their DX budgets in AD&D and another 12-13 percent in IT services. Meanwhile, the transportation industry will devote nearly half of its spending to connectivity services.

The fastest growing technology categories are cloud infrastructure (29.4 percent CAGR), business services (22 percent CAGR), and applications (21.8 percent CAGR). And, despite a CAGR that is slower than the overall market, AD&D spending will grow fast enough to overtake IT services as the second largest DX technology category by 2020.

More than half of all DX investments in 2017 will go toward technologies that support operating model innovations. These investments will focus on making business operations more responsive and effective by leveraging digitally-connected products or services, assets, people, and trading partners.

Outlook for New Digital Growth Investment

Investments in operating model DX technologies help businesses redefine how work gets done. The second largest investment area will be technologies supporting omni-experience innovations that transform how customers, partners, employees, and things communicate with each other and the products and services created to meet unique and individualized demand.

According to the IDC assessment, Asia-Pacific (excluding Japan) will see the largest investments in DX technologies in 2017 with 37 percent of the worldwide total. DX spending in this region will be led by the discrete and process manufacturing industries as well as professional services firms.

The United States will be the second largest region with 30 percent of the worldwide total, led by professional services, discrete manufacturing, and the transportation industries. Latin America and the Middle East and Africa will experience the fastest growth in DX spending with five-year CAGRs of 23.4 percent and 22.6 percent, respectively.

Thursday, February 23, 2017

How New Services will Advance the Internet of Things

As the Internet of Things (IoT) market matures during 2017, there's an increased focus on IoT service development, as more vendors explore the various new applications that are helping to stimulate growth in the sector. That said, many more devices will be 'online' this year. Many for the first time.

It's estimated that 8.4 billion connected 'things' will be in use worldwide in 2017 --that's up 31 percent from 2016, and will reach 20.4 billion by 2020, according to the latest market study by Gartner. As a result, total spending on endpoints and IoT services will reach almost $2 trillion in 2017.

Moreover, Greater China, North America and Western Europe are driving the use of connected things and it's estimated that the three regions together will represent 67 percent of the overall IoT installed base in 2017.

Internet of Things Market Development 

The consumer segment is the largest user of connected things, with 5.2 billion units in 2017. That represents 63 percent of the overall number of applications in use. In contrast, businesses are on pace to employ 3.1 billion connected things in 2017.

According to the Gartner assessment, aside from automotive systems, the apps that will be most in use by consumers will be smart TVs and digital set-top boxes. Meanwhile, smart electric meters and commercial security cameras will be most in use by businesses.

Furthermore, applications tailored to specific industry verticals -- including manufacturing field devices, process sensors for electrical generating plants and real-time location devices for healthcare -- will drive the use of connected things among businesses through 2017, with 1.6 billion units deployed.

However, cross-industry devices, such as those targeted at smart buildings -- including LED lighting, HVAC and physical security systems -- will likely take the lead. By 2020, cross-industry devices are forecast to reach 4.4 billion units, while vertical-specific devices will reach 3.2 billion units.

Outlook for IoT Application Growth

While consumers purchase more devices, businesses spend more. In 2017, the use of connected things among businesses will drive $964 billion in revenue. Consumer applications will amount to $725 billion during 2017. And by 2020, hardware spending from both segments will reach almost $3 trillion.

"IoT services are central to the rise in IoT devices," said Denise Rueb, research director at Gartner. Total IoT services spending -- professional, consumer and connectivity services -- is on pace to reach $273 billion in 2017.

Services are dominated by the professional IoT-operational technology category, where service providers assist businesses in designing, implementing and operating IoT systems. However, Gartner believes that connectivity services and consumer services will grow at a faster pace.

Wednesday, February 22, 2017

Smart Home Revenue will Reach $195 Billion in 2021

Since the rise of the smartphone, the term 'smart' may simply mean that a device has on-board wireless internet connectivity. Therefore, a Smart Home is one that is designed to deliver or distribute digital services, through a range of networked devices.

Smart home automation and monitoring devices will grow to over 770 million globally by 2021, representing an eleven-fold rise from just 68 million estimated in 2016, according to the latest market study by Juniper Research.

Smart Home Application Market Development

The new study found that increasing adoption of platform evangelism and openness to partnerships is boosting third party application development of devices, especially within developed markets.

Indeed, the study findings uncovered that North America, Far East & China and Western Europe will account for almost 75 percent of all households adopting the technology in 2021.

Moreover, home automation hardware sales are rapidly exceeding subscription services, such as AT&T's Digital Life offering. Juniper forecasts that while homes adopting this payment model will increase, a one-off purchase model will see faster growth over the next 5 years.

The analyst found that revenues from smart home hardware sales will most likely exceed subscription revenues for the first time in 2018, reaching $6.2 billion. But there are many challenges that are ahead for vendors and service providers.


With the launch of O2 Home in the UK, according to the Juniper assessment, they claim that this will remain a niche offering, due to the inability to on-board other devices. They also believe that the subscription business model was not fit for such an immature market.

New entrants and disruptors will intensify input from the software developer community, while utilizing technologies such as machine learning to improve automation platform intelligence, will successfully enter the market in 2017.

Juniper predicts that this will not only drive increased ‘smart’ device integration, but also generate case-specific applications, which until now have been lacking.

Outlook for Smart Home Innovation

"Successful players will be able to identify critical issues which can be alleviated through the introduction of smart home technology. For example, countries that are faced with ageing populations, such as Japan, will benefit from increasing interplay between automation and digital health services," said Sam Barker, analyst at Juniper Research.

Due to the fragmented market, innovation will play a key role in the success of start-up companies, rather than their agility. The major platform vendors -- Apple, Amazon, Google and Samsung -- will continue to drive the market, and so new entrants should make their device part of a compelling service offering.

Tuesday, February 21, 2017

Global Public Cloud Spending will Reach $203.4 Billion

Worldwide spending on public cloud services and infrastructure will reach $122.5 billion in 2017 -- that's an increase of 24.4 percent over 2016, according to the latest market study by International Data Corporation (IDC).

Over the 2015-2020 forecast period, overall public cloud spending will experience a 21.5 percent compound annual growth rate (CAGR) -- that's nearly seven times the rate of overall IT spending growth.

By 2020, IDC forecasts public cloud spending will reach $203.4 billion worldwide.

Public Cloud Market Development

Software as a Service (SaaS) will remain the market leader, capturing nearly two thirds of all public cloud spending in 2017 and roughly 60 percent in 2020. However, spending on Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) will grow at much faster rates than SaaS, with five-year CAGRs of 30.1 percent and 32.2 percent, respectively.

"In 2017, discrete manufacturing, professional services, and banking will lead the pack in global spending on public cloud services as they look for greater scalability, higher performance, and faster access to new technologies," said Eileen Smith, program director at IDC. "Combined, these three industries will account for one third of worldwide public cloud services spending, or $41.2 billion."

The industries that will see the fastest growth in public cloud spending over the five-year forecast period are professional services (23.9 percent CAGR), retail (22.8 percent CAGR), media (22.5 percent CAGR), and telecommunications (22.1 percent CAGR).

Nearly half of all public cloud spending will come from very large businesses while medium-sized businesses will deliver more than 20 percent throughout the forecast. Large businesses will see the fastest growth with a five-year CAGR of 23.2 percent.

While purchase priorities vary somewhat depending on company size, the leading product categories include customer relationship management (CRM) and enterprise resource management (ERM) applications in addition to server and storage hardware.

The United States will be the largest market for public cloud services, generating more than 60 percent of total worldwide revenues. Western Europe and Asia-Pacific (excluding Japan) will be the second and third largest regions with 2017 spending levels of $24.1 billion and $9.5 billion, respectively.

Outlook for Public Cloud Application Growth

In Western Europe, the public cloud market will grow at a healthy 23.2 percent CAGR over the forecast period and utilities, insurance, and professional services industries will be the most dynamic market spaces.

European companies have been slower in the adoption of cloud when compared to their U.S. counterparts, but now the market is maturing and it is the right time for cloud providers to target and capture the untapped segments.

"The cloud will become more distributed (through IoT edge services and multi-cloud services), more trusted, more intelligent, more industry and workload specialized, and more channel mediated. As the cloud evolves these important new capabilities and use cases for the cloud will dramatically expand," added Frank Gens, senior vice president and chief analyst at IDC.

Monday, February 20, 2017

Digital Games will Become $100 Billion Industry in 2017

Digital entertainment will continue to evolve in 2017. In the mobile space, online video gaming has changed, with a move away from longer form Role Playing Games (RPG), to shorter games which allow greater interaction with other players.

That said, casual games maintain their dominance in this industry. However, there's a significant rise in popularity of titles such as 'Clash Royale' which are competitive, short-form games that also integrate the idea of clans or teams of players.

Aided by the adoption of popular franchises onto mobile devices, 2016 has seen strong growth in the number of games accessed on smartphones. Both new, optimized titles -- in terms of engagement and revenue generation -- and reworked classics have proved to be a hit with consumers.

Video Game Market Development

A new study from Juniper Research has found that revenues from the global digital games market are set to reach the $100 billion milestone by the end of this year. That's an amazing accomplishment.

According to the latest market study findings, contrary to previous concerns, the PC market has seen re-invigoration via Free to Play (F2P) games. Besides, coupled with the continued growth of mobile, the online video game industry will see total revenues reach $132 billion by 2021.


Juniper found Supercell to be the clear market leader, effectively monetizing consumers through engaging games, highly rated by consumers. The research advised that publishers such as Niantic must create longevity and engagement, so they don't see a drop-off in terms of active users.

Publishers are now seeking to integrate in-game advertising. The research found that this will be most effective when users opt-in -- watching a short video to provide players with additional in-game credits can be marketed alongside paid options for an ad-free experience.

Mobile and PC Gaming Growth Potential

The research noted rapid adoption of the F2P monetization strategy on PC devices, where consumers are enticed into accessing a game which is free, before developers harness the freemium model -- popularized by mobile games, in order to accelerate spend, with this accounting for almost 80 percent of the platform's revenues by 2021.

"Juniper analysts believe there is further opportunity for F2P on PC -- particularly in Western markets -- as well as console, with digital platforms such as Xbox Live playing host to F2P titles, which are then monetized via in-game purchases and add-ons," said Lauren Foye, analyst at Juniper Research.

Friday, February 17, 2017

Telecom Providers Adapt to New Enterprise IT Demands

Enterprise networking vendors and telecommunication service providers encountered a series of challenges in 2016, as more customers shifted their focus from managing business technology investment to the strategic procurement of products and services related to digital transformation projects.

That's why investments in fiber networks, 5G wireless, NFV and SDN will be critical for telecom service providers to keep pace with market demand over the next five years, as more CIOs integrate next-generation technologies into their IT environments, according to the latest market study by Technology Business Research (TBR).

Enterprise IT Market Development

IT services remained the largest enterprise segment in 3Q16, with combined revenue among benchmark companies rising 9 percent year-to-year to reach $11.7 billion due to growth in demand for Internet of Things (IoT), cloud computing and IT security.

Furthermore, the divestment of Verizon and CenturyLink data centers illustrate that some legacy telecom carriers are no longer attempting to compete directly with the leading global public cloud service providers -- such as Amazon Web Services, Microsoft and IBM.

"Telecom carriers are instead focusing their cloud businesses on establishing and expanding partnerships to build their cloud network connectivity platforms, while leveraging proceeds from data center divestment to accelerate fiber initiatives," said Chris Antlitz, senior analyst at TBR.


That said, NTT, T-Systems and Telefonica are the exceptions to this trend, as these forward-looking companies invest in data centers and portfolio expansion to gain market share locally, against the major global cloud service  leaders.

Most enterprise network operators have begun field-testing pre-standards 5G technologies, which will position them to sustain long-term IT services revenue growth and support next-generation IoT solutions when technology standards are established by 2020.

Moreover, enhanced solutions in healthcare -- as well as 3D printing, smart cities and autonomous driving -- have been identified by industry analysts as predominant IoT use cases so far for 5G networks.

Outlook for NFV and SDN Applications

According to the TBR assessment, total strategic data revenue increased 9.8 percent year-to-year in 3Q16 to $6 billion due to rising demand for high-speed broadband, VPN and Ethernet solutions.

All the major enterprise network operators have begun NFV or SDN deployments, which is enabling service providers to launch scalable data services such as SD-WAN and Network-as-a-Service (NaaS).

Telecom network operators need to continue building their NFV and SDN portfolios to remain competitive, as demand will increase when these key services gain traction. Operators are also embracing NFV and SDN to reduce operating expenses and shift capital expense to open platforms.

Thursday, February 16, 2017

Superior IT Vendors Have Forward-Thinking Leaders

The senior executives who approve the purchase of business technology, and the industry analysts that influence them, have been very clear that they expect IT vendors to understand and respond to complex digital transformation agendas.

That said, many vendors have a go-to-market strategy that hasn't evolved in a decade or more, and it's impacting their growth potential. The few that are attuned to the IT market of today are reaping the rewards.

Meanwhile, 451 Research indicates that while 49.4 percent of enterprises are undergoing major IT transformation initiatives, which often include migration of current workloads to public cloud services, server spending remains steady.

IT Server Market Development

However, many IT buyers say their server vendors must demonstrate that they understand their business requirements, which is an increasingly important factor with cloud services and low-cost infrastructure underpinning software-defined IT environments.

"There is a clear opportunity for server vendors to guide customers into next-generation technologies while preserving their current distribution of standard infrastructure," said Christian Perry, research manager at 451 Research. "To seize this opportunity, vendors must work more closely with customers and prospects to understand current and future business requirements."

In fact, when customers were asked to rate their vendors both prior to purchase (Promise) and following implementation (Fulfillment) of traditional servers and converged infrastructure, cost and the ability to understand customer business needs consistently ranked lowest compared to other rating attributes.

In contrast, product-specific attributes received consistently high ratings for both the Promise and Fulfillment indices. And, in a commodity market like IT servers, vendors that differentiate on services and support -- which is also a critical future driver among buyers -- will win.

"As compute infrastructure choices expand beyond traditional servers, customers are more critical than ever about their x86 servers because they must provide a better ROI than competing servers, cloud services and converged infrastructure," Perry said.

According to this analyst assessment, two attributes in converged infrastructure lagged all others by a large margin across both Promise and Fulfillment: Understands My Business and Cost.

Outlook for IT Server Vendor Advancement

While converged infrastructure might fit more strategically within the IT plans for some organizations, it appears that the vendors selling the infrastructure do so primarily from a transactional basis, rather than a strategic IT basis.

For customers that purchase converged products only to satisfy project requirements, this approach is probably adequate, but customers displacing large portions of their legacy server infrastructure tend to prefer vendors that understand the businesses of customers in disparate verticals and regions.

Furthermore, those legacy server vendors that still believe that their installed base has an upside growth potential must learn to speak the language of the C-suite, in order to be viewed as informed and credible suppliers for today's enterprise IT requirements. In most cases, new forward-thinking sales and marketing leadership is the only way to stay relevant in this rapidly changing market.

Wednesday, February 15, 2017

New Internet of Things Opportunity for Mobile Operators

As the array of mobile services and delivery devices continues to evolve, mobile network operator competition has intensified. With many over-the-top players now providing popular alternatives to texting and voice calls, telecom service provider core revenues are eroding.

Meanwhile, Juniper Research has calculated that mobile network operators can capture an additional $85 billion in revenues over the next five years, through the deployment and enhancement of non-core services -- including Big Data analytics and the Internet of Things (IoT).


MNO Market Development Opportunities

The new research found that there was a significant opportunity for mobile network operators to move beyond connectivity provisioning, by selling their customer data to clients in both raw and analyzed forms.

They could monetize data models, including pay-per usage, metered usage and results-based fees. Besides, clients would likely benefit from these offerings, resulting in a demonstrable return on investment for the analytics package.

However, for operators to maximize their potential from IoT device connectivity and enablement, they would need to ensure that their forthcoming 5G networks are fully optimized for a multitude of connected devices.

According to the Juniper assessment, mobile network operators should follow the example of AT&T, Telefonica and NTT DoCoMo, which have set stringent targets for network virtualization. Using this approach, operators can facilitate customization for individual clients while also reducing expenditure.

Outlook for IoT and Big Data Revenues

That said, the Juniper market study findings indicate that the backhaul capacity of 5G networks will need to be much higher than for predecessor technologies, in order to cope with the anticipated increased traffic passing through the cell sites.

"Upscaling capacity requires a radical reappraisal of backhaul techniques so the cost per Mbps is significantly reduced from its current (3G/4G) level," said Dr Windsor Holden, head of forecasting & consultancy at Juniper Research.

The need for ultra-low latency applications could be addressed by 'mobile edge computing' solutions overlaid onto the mobile radio access network, with hosted apps also benefiting from real-time network information.

Tuesday, February 14, 2017

Virtual Reality Platforms Gain Many New Use Cases

After an initial market launch that lacked available media, virtual reality (VR) platforms are now ready to thrive from the introduction of compelling new content. According to the latest market study by ABI Research, total VR device shipments will reach 110 million units by 2021.

While mobile device-reliant VR shipments -- such as Samsung Gear VR and Google Daydream -- dwarf other VR device types, standalone devices will experience a 405 percent CAGR through 2021, compared to a 42 percent CAGR for mobile VR.

Market Development for Virtual Reality Apps

New and emerging device vendors -- such as Royole and Pico -- already entered the global arena, with many other Chinese manufacturers poised to expand their presence in this nascent market. Besides, independent software developers are poised to create new apps.

"Mobile VR built a solid foundation for the overall market over the past few years, but standalone VR devices will eventually drive it," said Eric Abbruzzese, senior analyst at ABI Research.

Low cost and high accessibility will likely drive VR adoption with mobile devices and associated VR accessories. However, a trend toward standalone devices is gaining momentum, and will continue over the next five years until mobile and standalone VR devices reach shipment parity.

With an influx of standalone VR devices, a greater range of use cases will be explored, broadening the gaming-focused VR market of today. Furthermore, ABI Research anticipates a total market size of $64 billion by 2021.

Non-gaming software and content, VR advertising, and VR-related video revenue will together hold a significant portion of the market. VR applications in retail and marketing will therefore see a 124 percent CAGR through 2021.

Video, education, and tourism are expected to all see significant growth, and while not forecast to be as large as the VR gaming market, it will be a notable addition to this evolving marketplace.

Outlook for New VR Use Cases

According to the ABI assessment, the three primary VR device types -- mobile, standalone, and tethered -- are entering the market with unique value propositions, target audiences, and use case support.

However, ABI analysts believe that there is the less understood market of mixed reality (MR) on the horizon. MR incorporates elements of augmented reality to VR devices, as evident in Intel’s Alloy reference design.

Associated machine vision technology like RealSense or Google Tango opens a compelling AR/VR hybrid opportunity on the mobile platform. Taking the best of both AR and VR will open up the enterprise market, and enable entirely new use cases and associated applications.

Monday, February 13, 2017

Healthcare IT Services Market will Reach $68.3 Billion

The healthcare landscape has been subject to significant turbulence due to a broad range of factors -- including escalating costs, widespread regulatory amendments, changing business models, and evolution of the patient-centric paradigm.

That said, controlling rising costs and improving operational efficiency in the healthcare IT sector will be a high priority during 2017, as more hospital and clinic organizations seek to document the quality of their care and ramp up patient engagement.

Healthcare IT Market Development

By 2020, healthcare providers will more than double their spending on technology services, which represents a revenue opportunity of over $9 billion for the healthcare IT outsourcing (ITO) vendors, according to the latest market study by the Everest Group.

The healthcare provider segment is poised to be one of the fastest growing segments in the healthcare IT services market in coming years.

According to the study findings, accelerated IT investments on the part of healthcare providers will be driven in large part by new reimbursement policies taking effect under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

Under MACRA, providers will earn more or less depending on the quality and effectiveness of the care they provide. As a result, healthcare providers will continue investing heavily in technology that supports initiatives such as compliance, legacy modernization, electronic health records (EHR) and patient engagement.

"MACRA encourages ongoing technology adoption by U.S. healthcare providers by mandating specific tech-related measures," said Abhishek Singh, practice director at Everest Group.

This will translate directly into four IT investment trends that will develop over the course of the next 24 months. First, performance improvement and cost takeout will be a strategic focus; both are critical for compliance and to raise capital from the market.

Second, patient engagement will drive the differentiation strategy. Third, there will be a growing urgency for data security. And, finally, there will be a more demand for IT interoperability, nimbleness and innovation.

Other key findings from the study include:
  • The global healthcare (payer and provider combined) ITO market is expected to grow at 12 percent CAGR during the forecast period, reaching $68.3 billion in 2020.
  • Demand in the provider ITO market has been concentrated in the larger health systems.
  • Currently, application, development and maintenance (ADM), testing and network services rank highest among the IT services included in ITO deals within the provider segment.
  • Given the consolidation and convergence in the market, systems integration (SI), testing and asset rationalization work streams are expected to grow in 2017.