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Friday, July 22, 2016

Meta-Cloud: a Coexistence of Distinct Service Providers

CIOs have recognized that they must plan for a world where many cloud platforms coexist together, supporting the diverse needs of user groups within their midst. To some informed cloud service buyers, the notion of a one-size-fits-all public cloud offering now seems absurd.

Granted, a typical IT manager's role could be simpler if they only used one vendor for all use cases and associated cloud applications. But the savvy Line of Business leaders won't let that happen -- they'll continue to demand best-fit solutions. It's an important Hybrid IT infrastructure strategy.

IHS Markit interviewed the key decision makers at 158 North American organizations about the adoption of on-premises cloud architecture within the enterprise, purchase of off-premises cloud services now, and how they plan to evolve their use of off-premises cloud services over the next two years.

Cloud Computing Market Development Trends

Enterprise respondents to the cloud services survey plan to spend 17 percent of their IT budgets on off-premises cloud services by 2017 -- that's estimated to be an increase of 58 percent over 2015.

Moreover, survey respondents expect to increase or maintain adoption in all categories of cloud computing services through 2018 -- including infrastructure as a service (IaaS), cloud as a service (CaaS), platform as a service (PaaS) and software as a service (SaaS).


That said, here's the key revelation from this market study: survey respondents indicate they will likely use many different cloud service providers. On average, they anticipate using as many as eight distinct cloud service providers by 2018 -- driven primarily by the specialized needs of their internal business users.

The adoption of multiple cloud service providers is in-line with the IHS market outlook for off-premises public and private cloud computing services, which projects a move to a distributed architecture enabling a 'cloud of clouds' -- what they've referred to as a Meta-Cloud model.

Demand for a Cloud Coexistence Strategies

IHS analysts believe that the Meta-Cloud model will become increasingly important, as consuming off-premises cloud services from many different vendors will likely be a management challenge for most enterprise IT organizations.

According to the IHS assessment, there are significant opportunities for vendors that act as cloud service brokers. They'll provide a single connection to an enterprise with a service-level agreement (SLA) and single point of management by which the IT organization can access a variety of purpose-build cloud services.

With an average of 22 percent of physical servers, 17 percent of virtual machines and 12 percent of Linux containers expected to be in use within off-premises data centers by 2018, network equipment vendors must demonstrate how their equipment can be part of a cohesive hybrid cloud deployment -- where interoperability between network management, server virtualization and data center orchestration software is a critical factor for success.

Thursday, July 21, 2016

Cloud IaaS Service Revenue will Reach $43.6 Billion

Cloud computing services have experienced consistent growth over the last decade. Savvy IT vendors that transformed their portfolio have reaped the benefits of their strategic foresight. Others are still reacting to the diminished demand for their legacy product offerings.

Many CIOs now consider public cloud infrastructure as a service (IaaS) as a viable alternative to their on-premises IT infrastructure. A recent survey of over 6,000 IT organizations found that nearly two thirds of the respondents are either already using or planning to use public cloud IaaS by the end of 2016.

According to their latest worldwide market study, International Data Corporation (IDC) forecasts public cloud IaaS revenues to more than triple from $12.6 billion in 2015 to $43.6 billion in 2020 -- with a compound annual growth rate (CAGR) of 28.2 percent over the five-year forecast period.

Public IaaS Market Development Trends

"Public cloud services are increasingly being seen as an enabler of business agility and speed," said Deepak Mohan, research director at IDC. "This is bringing about a shift in IT infrastructure spending, with implications for the incumbent leaders in enterprise infrastructure technologies."

IDC believes growth of public cloud IaaS has also created new service opportunities around adoption and usage of public cloud resources. That being said, with changes at the infrastructure, architectural, and operational layers, public cloud IaaS is slowly transforming the enterprise IT value chain.

The public cloud IaaS market grew 51 percent in 2015. IDC expects this high growth to continue through 2016 and 2017 with a CAGR of more than 41 percent. However, the growth rate is expected to slow after 2017 as enterprises shift from cloud exploration to cloud optimization.

Furthermore, alternatives such as managed private cloud will grow in maturity and availability, providing IT organizations with more options as they plan their infrastructure evolution to support digital transformation projects.

Demand for Hybrid Cloud Infrastructure

Large enterprise leaders seek a flexible and adaptive business technology environment, therefore hybrid solutions that mix their existing on-premises IT infrastructure with public cloud infrastructure represents the optimal configuration.

In fact, hybrid cloud infrastructure adoption is already a common practice at many large enterprises across the globe, and IDC now predicts that 80 percent of IT organizations will be committed to embrace hybrid architectures by 2018.

Moreover, the dominance of the leading cloud service providers is expected to continue throughout the forecast period, as economies of scale and continued investment drive the cycle of adoption and growth.

Wednesday, July 20, 2016

Connected TVs are in 65 Percent of American Homes

According to the findings from a recent study, Connected TV devices are now in nearly two-thirds of all television households within the U.S. market. There are already more connected TV devices in U.S. households than there are pay-TV set-top boxes.

Leichtman Research Group (LRG) finds that 65 percent of American TV households have at least one television set connected to the Internet via a video game system, a smart TV set, a Blu-ray player, and/or a stand-alone device -- that's up from 44 percent in 2013, and 24 percent in 2010.

Connected TV Market Development Results

Among those with any connected TV devices, 74 percent have more than one device, with a mean of 3.3 per connected TV household. Those with a connected TV generally find them to be easy to use:

  • 70 percent of all with a connected TV agree (8-10 on a 1-10 scale) that streaming services like Netflix are easy to access via connected TV devices, while 12 percent disagree (1-3).

The LRG study also found that 77 percent of TV sets in pay-TV households have a pay-TV provider's set-top box, with a mean of 2.2 boxes per pay-TV household. Pay-TV subscribers tend to express little animosity toward set-top boxes:

  • Fully 20 percent with a pay-TV HD set-top box agree (8-10) that set-top boxes from TV companies are a waste of money, while 44 percent disagree (1-3).
  • 42 percent with a pay-TV HD set-top box agree (8-10) that set-top boxes from TV companies provide features that add value to the TV service, while 16 percent disagree (1-3).
  • 68 percent with 3 or more set-top boxes are very satisfied (8-10) with their pay-TV provider – compared to 54 percent with 1-2 set-top boxes.

Overall, there are more connected TV devices in U.S. households than there are pay-TV set-top boxes. Across all households (including those that do not have any of these), the mean number of connected TV devices per household is 2.1, while the mean number of pay-TV set-top boxes per household is 1.8.

These findings are based on a survey of 1,206 TV households throughout the U.S. market, and are part of a new LRG study.

Other findings from the LRG study include:

  • 83 percent of households with any type of connected TV device get a pay-TV service – similar to 81 percent with no connected TV devices.
  • 38 percent of adults with a pay-TV service watch video via a connected TV device at least weekly – compared to 48 percent of pay-TV non-subscribers.
  • 79 percent of all TV sets in US households are HDTVs – an increase from 34 percent of all TV sets in 2010, and 3 percent in 2004.
  • 33 percent of non-4K Ultra HDTV owners have seen one in use – up from 10 percent in 2014.
  • 25 percent of those who have seen a 4K HDTV in use are interested in getting one – compared to 9 percent of those who have not seen a 4K HDTV.

Tuesday, July 19, 2016

Global Digital Content Revenue will Exceed $180 Billion

As more digital content migrates to online platforms, the trend moves away from content ownership and towards content access. It also means that the device on which you pay for the content may not be the device where you primarily access that same content.

The value of digital content transactions paid for by telecom service provider billing is expected to reach $47 billion by 2020 -- that's more than four times 2015 results of just under $11.3 billion, according to the latest worldwide market study by Juniper Research.

Exploring Digital Content Payment Options

According to the study findings, Apple’s decision to test telecom carrier billing in Germany and Russia is likely to drive a substantial number of new deployments in the medium term.

The move will be essential if Apple is to monetize unbanked owners of refurbished mobile devices in emerging markets, who would otherwise be limited to paying for content via iTunes gift cards.

Mobile network service provider billing solutions could be a key means of monetizing content purchased within an array of environments, including connected cars and for in-flight infotainment.

However, the research found that the operator practice of setting daily or monthly carrier bill spend limits at a low level to minimize exposure to fraud or compensation claims was counterproductive.

"If you have a daily spend limit of $20 in place, consumers are severely constrained in the amount of content they can purchase, particularly given the fact that many content bundles – such as Clash of Clans gems bundles – are priced at close to this level," said Dr. Windsor Holden, head of forecasting and consultancy at Juniper Research.


Online Payment Market Development

Meanwhile, Juniper analysts believe that even though other online payment types -- such as PayPal -- were likely to experience significant growth, the majority of payments (69 percent by value in 2020) would continue to be made via bank debit and credit cards.

Juniper claimed that this would also remain the case for purchases made on mobile devices, with consumers increasingly using smartphones and media tablets to pay for higher-value content which is subsequently consumed on connected TVs or video game consoles.

Overall, Juniper Research estimates that digital content revenues will increase from just under $140 billion worldwide in 2015 to $180 billion in 2017.

Monday, July 18, 2016

Western Europe OTT Video will Reach $14.64B in 2021

Online video entertainment has disrupted most legacy media companies that refused to acknowledge the market opportunities beyond traditional pay-TV services. This shift has become a global phenomenon. The impact and implications are far-reaching.

Western European over-the-top (OTT) television and video revenues will more than double between 2015 and 2021. However, growth rates within each nation will vary considerably, according to findings from the latest market study by Digital TV Research.

"OTT adoption is already high in Scandinavia, the Netherlands and the UK, but it has been much more muted in other countries -- such as France, Spain and Portugal," said Simon Murray, principal analyst at Digital TV Research.

European OTT TV Market Development

OTT TV and video revenues in Western Europe will reach $14.64 billion in 2021 -- that's up from $6.40 billion in 2015. From the $8.25 billion in revenues to be added between 2015 and 2021, the UK will contribute $2.30 billion, Germany $1.34 billion, France $1.13 billion and Italy $0.99 billion. Moreover, the UK will remain the market leader.

Subscription video on-demand (SVOD) will become the region's largest OTT revenue source in 2018 before advertising video on-demand (AVOD) sites regains its crown in 2020. The AVOD sector has been boosted by the rapid expansion in mobile advertising.


AVOD will bring in $5.79 billion by 2021 – that's a $3 billion increase on 2015. The UK will supply $2,333 million of the 2021 advertising total, followed by Germany with $904 million.

SVOD revenues will total $5,632 million by 2021 – that's up from $2,098 million in 2015. Nearly $1 billion will be added in 2016 alone. The UK (up by nearly $800 million between 2015 and 2021 to $1,507 million) will remain the SVOD revenue leader – generating as much as second-placed Germany and third-placed France combined in 2021.

European OTT Video Market Upside

Digital TV Research analysts forecast 53.71 million SVOD subscriptions by 2021 -- that's up from an expected 31.43 million by end-2016. More than 8 million subscribers will be added in 2016 alone. Nearly a third (30.7 percent) of the region’s TV households will subscribe to a SVOD package by 2021 -- that's triple the 13.6 percent recorded at the end of 2015.

Sweden will have more SVOD subscribers than Spain in 2021, regardless of only having a quarter of the population. Despite this, the number of subscriptions will quadruple in France and Italy between 2015 and 2021 and will grow eight-fold in Spain.

Friday, July 15, 2016

Software-Defined IT Solutions are Gaining Momentum

Server, storage and networking hardware revenue decreased 1.1 percent year-to-year in the first quarter of 2016 (1Q16), due to ongoing software prioritization in the IT data center market, according to the latest market study by Technology Business Research (TBR).

Year-to-year growth in the industry-standard server (ISS) and networking product segments was not enough to drive overall revenue growth during the quarter, due to steep declines in the legacy proprietary server segment.

Software functionality is very important in the migration to hybrid cloud-enabled and data-centric IT business models, as enterprise buyers seek to mitigate complexity and management challenges. This change in demand is causing a significant shift away from proprietary servers and legacy storage technologies.

Data Center Market Development Transition

"Customers target high business growth areas to make strategic IT investments, but at the same time, they face budget restraints," said Krista Macomber, senior analyst at TBR.

Hardware commoditization drove combined proprietary server and storage revenues for vendors down by 27.9 percent and 7.3 percent year-to-year, respectively.

Growth of ISS and networking revenues was attributed to vendors’ abilities to monetize investments in emerging growth areas such as cloud computing and flash storage.

Data center hardware revenues declined across the Americas and EMEA, while growing in APAC for the sixth consecutive quarter during 1Q16, per the latest TBR estimates.

TBR analysts believe that geopolitical challenges and increasing volatility in emerging countries will drive vendors to capitalize on opportunities in markets of consistently high growth.

Outlook for Software-Defined Infrastructure

"Storage-focused vendors are investing in areas such as converged infrastructure and flash to better address customers’ cloud and analytics workloads needs," said Macomber.

They're also making these strategic investments to differentiate their portfolios, as the storage market continues to decline due to the IT investment shift from traditional hardware to software-defined infrastructure.

To cope with geopolitical challenges and support growth of enhanced portfolio capabilities, vendors seek local partners in areas where they fail to gain market entry. Additionally, vendors are making more acquisitions in regions where they would otherwise struggle to expand.

Thursday, July 14, 2016

Growing Demand for Adaptable Hybrid IT Infrastructure

It's a given, cloud computing will become an essential component of every enterprise Digital Transformation agenda. By 2020, a corporate "no-cloud" policy will be as rare as a "no-internet" policy is today, according to the latest worldwide market study by Gartner.

Cloud-first is replacing the defensive no-cloud stance that dominated many large IT vendors in recent years. Today, most provider technology innovation is cloud-centric, with the stated intent of adapting the technology to on-premises.

"Aside from the fact that many organizations with a no-cloud policy actually have some under-the-radar or unavoidable cloud usage, we believe that this position will become increasingly untenable," said Jeffrey Mann, vice president at Gartner.

The Adaptive Hybrid IT Foundation

According to the Gartner assessment, cloud services will often be the default option for software deployment. The same is true for custom software, which increasingly is designed for some variation of public or private cloud.

This doesn't mean that everything will be cloud-based. Hybrid cloud will become the most common usage model -- where on-premises data centers, hosted private and public cloud are all potential components of a flexible and adaptive IT infrastructure strategy.

Other Gartner cloud-related predictions include:

By 2019, more than 30 percent of the 100 largest IT vendors' new software investments will have shifted from cloud-first to cloud-only scenarios. The now well-established stance of cloud-first in software design and planning is gradually being augmented or replaced by cloud-only. Gartner believes that this also applies to private and hybrid cloud scenarios.

More leading-edge IT capabilities will be available only in the cloud, forcing reluctant organizations closer to cloud adoption. While some applications and data will remain locked in older technologies, more new solutions will be cloud-based, thus further increasing demand for integration infrastructure.

As delivery shifts more to the cloud, most IT organizations will have to reorganize to reflect the business realities of cloud computing: continuous innovation and change, pervasive integration, competing with cloud providers for some initiatives, and crucial prevalence of influence over control in IT's relationship with lines of business.

By 2020, more compute power will have been sold by IaaS and PaaS cloud providers than sold and deployed into enterprise data centers. The Infrastructure as a Service (IaaS) market has been growing more than 40 percent in revenue per year since 2011, and it is projected to continue to grow more than 25 percent per year through 2019.

Furthermore, by 2019, the majority of virtual machines (VMs) will be delivered by IaaS providers. By 2020, Gartner predicts that the revenue for compute IaaS and Platform as a Service (PaaS) will exceed $55 billion -- and likely pass the revenue for traditional servers.

Most enterprises will continue to have an on-premises (or hosted) data center capability. But with most compute power moving to IaaS providers, enterprises and vendors need to focus on managing and leveraging the best-fit hybrid combination of on-premises, off-premises, cloud and non-cloud IT architectures.

Wednesday, July 13, 2016

The $7 Billion Opportunity that Legacy IT Vendors Ignored

How did the Shadow IT phenomenon disrupt an established industry, when the signs of growing discontent were so clear and obvious? Many CIOs have been challenged to offer a similar experience -- easy to use, rapid provisioning of infrastructure -- to compete with the savvy public cloud service providers.

Meanwhile, most of the traditional IT vendors seemed to have little appreciation for shifting customer needs -- delivering their compute and storage in the same old way, regardless of the implications.

Not being oblivious to emerging market demand, new entrants seized the opportunity by creating a better way. As a result, the continued adoption of hyper-converged platforms has invigorated the waning data center IT infrastructure market.

But deployment expansion reveals even more challenges ahead that legacy vendors must address to preserve sales momentum -- as the market quickly departs from complex, stand-alone hardware deployments.

Hyperconverged Systems Market Development

According to the latest worldwide market study by Technology Business Research (TBR), the need for agile, cost-effective and easily managed infrastructure will drive a 50 percent CAGR from 2015 to 2020 for hyperconverged platforms, leading to a nearly $7 billion market by 2020.

"As some customers in mid-sized organizations expand their hyperconverged footprint, they are grappling with deployment steps that actually take more time than deployment of traditional, stand-alone infrastructure," said Christian Perry, principal analyst at TBR.

According to the TBR assessment, these include configuration, optimization and even the purchase itself. Considering that hyperconverged is inherently designed to simplify IT, successful vendors must ensure customer expectations match reality for deployment complexity.

Company-wide perceptions of hyperconverged platform deployments can differ from those of traditional infrastructure due to the expectations of business leaders for a seamless transition to the new technology.

Further, lines of business within organizations are sharply focused on the benefits that hyperconverged platforms can deliver post-deployment, including cost reduction and higher IT production levels.

Evolution of Data Center Transformation

TBR analysts believe that this focus leads to an anticipation that amplifies the urgency around deployments and pressures IT organizations to show quick time to value with their new investments in hyperconverged technologies.

New architectures often encounter growing pains as customer adoption expands. However, working on-site with customers through demonstrations, trial deployments and training throughout the purchase and deployment process will help vendors prevent customer frustration as they adjust to their new technology.

This is critical, because research shows satisfaction is strong once the new architecture is up and running. The transition of the data center will continue alone this path. Legacy IT vendors must adapt, or they'll become irrelevant.

Tuesday, July 12, 2016

Technology, Media and Telecom M&A Trends in 2016

The Technology, Media and Telecommunications (TMT) sector has experienced a re-balancing compared to the record M&A activity seen in 2015, according to the latest global market study by Mergermarket.

During the first half (H1) of 2016, 1,363 deals worth $223.1 billion represented a 41.6 percent decrease in value compared to H1 2015 ($382.3 billion, 1,580 deals), and the weakest H1 deal value and count since 2013 ($173.5 billion, 1,056 deals).

Reflecting this low activity, no mega-deals (< $10 billion) took place within the Technology, Media and Telecommunications sector during H1 2016, compared to a record nine during the same period in 2015, with the highest recorded deal of H1 -- Chinese Internet giant Tencent Holding's acquisition of Finland's online gaming editor Supercell -- valued at $8.6 billion.


TMT Market Development Results

Following a succession of high valued deals seen over the past few years, Telecommunications M&A seems to be feeling the effects of an increasingly saturated market.

According to the Mergermarket assessment, the sub-sector saw just 78 deals worth $27.1 billion during H1 2016, plummeting 82.4 percent by value compared to H1 2015 ($154.1 billion, 100 deals), to reach the lowest half-year deal value since H1 2009 ($26.9 billion, 77 deals).

Moreover, many Technology companies are at the beginning of their innovation life cycle, and as a consequence less mature businesses are coming to market commanding smaller price tags.

M&A targeting Technology during H1 ($152.0 billion, 1,025 deals) highlights this trend, recording a 25.9 percent value decrease compared to H1 2015 ($205.2 billion, 1,172 deals), while accounting for 147 fewer deals.

Europe suffered the largest regional fall in Technology M&A activity, with 305 deals worth $24 billion marking a 44.3 percent drop in value compared to H1 2015 (355 deals, $43 billion).

Furthermore, the run-up to the Brexit referendum slowed UK Technology M&A, with 75 deals worth $3.1 billion announced in the first half of the year representing a 57.5 percent decrease by value compared to H1 2015 (74 deals, $ 7.4 billion), and its third consecutive quarterly decline in deal value.

Monday, July 11, 2016

Digital Transformation of Legacy Government IT Systems

Government use of business technology is primed for change. Next-generation IT solutions developed for the more progressive commercial markets are starting to contribute to the recovery of the public sector IT and professional services market, according to the latest worldwide market study by Technology Business Research (TBR).

After five years of consistently declining revenues in the sector, government services contractors realized aggregate weighted average growth of 3.9 percent in the first quarter of 2016 (1Q16) -- that's a 640 basis-point improvement over year-to-year.

While TBR attributes a return to growth in part to industry consolidation among a few vendors, average organic revenue declined 0.9 percent year-to-year among the 18 companies included in their research study.

Governement IT Market Development

"The public sector IT and professional services market recaptured growth during 1Q16, marking the turnaround of a long-pressured industry," said Sebastian Lagana, senior analyst at TBR. "While headwinds remain, disruptive technology adoption provides well-positioned vendors the opportunity to realize growth objectives during 2016."

Governments at all levels and across regions look for new solutions to improve constituent services and to lower their operating costs. Vendors that have invested heavily in capabilities to support digital transformation projects -- including analytics and Internet of Things (IoT) solutions, coupled with strong cyber security services to protect data from criminals, rogue states and insider threats.

Consulting and agile methodologies further enhance a vendor's competitive position by ensuring they can collaborate with clients on solutions development, and walk through the change management necessary to achieve the desired ROI in large-scale IT transformations.

Improvement is particularly notable in the U.S. federal market, where budget pressures have hindered the ability to spend beyond what is necessary to maintain legacy IT systems. Growth in the American federal market has outpaced overall public sector revenue growth, estimated at 4.3 percent year-to-year.

Government IT Market Outlook

The U.S. federal market outlook is bright, as the challenges associated with budget limitations give way to a more stable environment, and a growing recognition for the need to modernize the huge number of obsolete government IT systems that would clearly benefit from a concerted overhaul.

First-quarter results support a TBR assessment that the public sector services market has recovered somewhat. While the complete integration of acquisitions in legacy business will temper inorganic contributions barring additional M&A activity, TBR expects continued growth in the low single digits in 2Q16, with a return to organic growth possible by the end of 2016.