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Friday, January 20, 2017

Consolidation in Global Data Center Colocation Market

Large enterprises continue to move some of their IT data center infrastructure to colocation facilities. That said, there was more vendor consolidation activity during last year, as a few key players decided to reduce their presence or totally exit the market.

According to the latest worldwide market study by 451 Research, the global colocation and wholesale market revenue will top $48 billion by 2021 in its latest quarterly release of the Data Center KnowledgeBase (DCKB), which tracks nearly 4,500 data centers operated by 1,193 companies worldwide.

Colo Data Center Market Development

In Q3 2016, the data center colocation and wholesale market gained $28.9 billion in annualized revenue. The majority of this revenue (42 percent) was generated in North America, with Asia-Pacific generating 31 percent.

Following a year of significant M&A activity in 2015, the first three quarters of 2016 maintained the momentum with notable industry consolidation that included Equinix completing its acquisition of Telecity Group, Tierpoint buying Windstream and Digital Realty Trust taking on eight of Equinix’s European data centers, among many other deals.


According to the 451 Research assessment, the data center market continues to grow, not only in many of the main markets, but increasingly in edge markets outside of the global top 20.

"Interest in edge markets is one of the factors driving consolidation," said Leika Kawasaki, senior analyst at 451 Research. "Over the next one to two years, we expect to see growing interest from top providers and investors in markets outside of the top 20, particularly in Asia and Latin America."

In terms of annualized colocation and wholesale revenue, as of Q3 2016 Equinix and Digital Realty remained the global leaders, with 9.5 percent and 5.7 percent share, respectively.

Once the Equinix acquisition of Verizon's data center business closes in mid-2017, Equinix market share is expected to expand to 11.4 percent of global annualized revenue, equivalent to double that of the second-largest provider, Digital Realty Trust.

Thursday, January 19, 2017

Digital Transformation Projects Drive New IT Investment

In today's economy, information technology (IT) is the essential foundation for new digital business transformation projects. It's also the open innovation platform that enables an enterprise to harness the collective capabilities of their commercial ecosystem that's online.

Worldwide IT spending is projected to total $3.5 trillion in 2017, a 2.7 percent increase from 2016, according to the latest market study by Gartner. However, this overall global growth rate is down slightly from earlier projections of 3 percent.

IT Infrastructure Market Development

"2017 was poised to be a rebound year in IT spending. Some major trends have converged, including cloud, blockchain, digital business and artificial intelligence. Normally, this would have pushed IT spending much higher than 2.7 percent growth," said John-David Lovelock, research vice president at Gartner.

However, Gartner analysts believe that some of the political uncertainty in global markets has fostered a wait-and-see approach causing some enterprises to forestall IT investments. That being said, forward-thinking companies will see the current environment as an opportunity to move ahead of their peer group.

Worldwide devices spending -- PCs, media tablets, smartphones -- is projected to remain flat in 2017 at $589 billion. A replacement cycle in the PC market and strong pricing and functionality of premium ultra-mobiles will help drive growth in 2018.

Moreover, emerging markets will drive the replacement cycle for mobile phones as smartphones in these markets are used as a main computing device and replaced more regularly than in mature markets.

The worldwide IT services market is forecast to grow 4.2 percent in 2017. Buyer investments in digital business, intelligent automation, and services optimization and innovation continue to drive growth.

Outlook for IT Spending Growth

"The range of spending growth from the high to low is much larger in 2017 than in past years. Normally, the economic environment causes some level of division, however, in 2017 this is compounded by the increased levels of uncertainty," said Mr. Lovelock.

For example, aggressive build-out of cloud computing platforms is pushing the global server forecast to reach 5.6 percent growth in 2017. This market projection was revised up 3 percent from last quarter's forecast and is sufficient growth to overcome the expected 3 percent decline in external controller-based storage and allow the data center systems segment to grow 2.6 percent in 2017.

Wednesday, January 18, 2017

Smartwatch Reset: Wearable Tech Vendor Reaction

When the smartwatch market came into being, most industry analysts assumed that Apple would dominate the new category. Now it seems that Google Android will likely lead the market, via its extensive open ecosystem of software developers.

While the number of high-end smartwatches is faltering, hybrid watches remain largely unaffected by the market slow-down, according to the latest market study by Juniper Research.

These watches have traditional watch faces but offer some connected functions -- such as tracking the user's steps or enabling NFC payments -- and claim a larger portion of the market than previously anticipated.

Smartwatch Market Development Trends

While basic smartwatches account for around 30 percent the current market value, Juniper anticipates that this share will grow to almost 40 percent within the next five years.

The new research findings anticipate that as the high-end multi-functional smartwatch market slows, vendors will refine or remove unpopular functionalities, focusing on specific use cases, such as fitness and health.

According to the Juniper assessment, multi-functional smartwatches are the most visible smartwatch category overall, but now that initial interest has waned, the segment is consolidating.

Motorola and Huawei have both withdrawn from the market, while Pebble and Vector have been acquired. The sector is now primarily the preserve of Apple, Samsung and Fitbit -- together with traditional watchmakers such as Fossil and TAG Heuer.


Juniper believes that device revenue from smartwatches will grow at a Compound Annual Growth Rate (CAGR) of 13.3 percent over the forecast period, reaching over $21.5 billion per year in 2021.

In the absence of a 'must-have' use case for multi-functional smartwatches, Juniper has scaled back its estimates for market growth, and anticipates less than 60 million smartwatches will be shipped annually by 2021.

"Now that the initial smartwatch buzz is over, a longer product lifecycle and sluggish adoption are responsible for the slowing market, as users do not regularly upgrade," said James Moar, senior analyst at Juniper Research.

Other key findings from the study include:
  • Despite being present in several smartwatches, NFC is unlikely to generate new use cases for the category, as it is frequently locked into the device vendor’s mobile payment system, hindering innovation.
  • Customizable watch faces dominate smartwatch app downloads, implying that Google Android will take most of the category’s software revenue.

Tuesday, January 17, 2017

New Cloud Infrastructure Spend will Grow Rapidly in 2017

Cloud computing will gain significant new adoption in the large enterprise market, with growth coming from public cloud services and increased on-premises cloud IT infrastructure investment, as more CIOs execute their hybrid cloud strategies.

Total spending on IT infrastructure products -- server, storage, and networking -- for deployment in cloud environments will increase by 18.2 percent in 2017 to reach $44.2 billion, according to the latest worldwide market study by International Data Corporation (IDC).

Cloud Infrastructure Market Development

Of this spending, 61.2 percent will be on public cloud data centers, while off-premises private cloud environments will contribute 14.6 percent. Furthermore, spending on IT infrastructure for on-premises private cloud deployments will growth by 16.6 percent.

By comparison, spending on traditional -- i.e. non-cloud -- IT infrastructure will decline by 3.3 percent in 2017, but will still account for the largest share (57.1 percent) of overall enterprise spending.

"In the coming quarters, growth in spending on cloud IT infrastructure will be driven by investments done by new hyperscale data centers opening across the globe and increasing activity of tier-two and regional service providers," said Natalya Yezhkova, research director at IDC.


In 2017, spending on IT infrastructure for off-premises cloud deployments will experience double-digit growth across all regions in a continued strong movement toward utilization of off-premises IT resources around the world.

That said, 57.9 percent end user spending in 2017 will still go to on-premises IT infrastructure -- which combines on-premises private cloud and on-premises traditional IT investments. Within on-premises settings, all regions will see sustained movement toward private cloud deployments.

Ethernet switches will be fastest growing segment of cloud IT infrastructure, increasing 23.9 percent in 2017, while spending on servers and enterprise storage will grow 13.6 percent and 23.7 percent, respectively.

In all three technology segments, spending on private cloud deployments will grow faster than public cloud while investments on non-cloud IT infrastructure will decline.

Outlook for Cloud IT Infrastructure Investment

Long term, IDC expects that spending on off-premises cloud IT infrastructure will experience a five-year compound annual growth rate (CAGR) of 14.2 percent, reaching $48.1 billion in 2020. Public cloud data centers will account for 80.8 percent of this amount.

Combined with on-premises private cloud, overall spending on cloud IT infrastructure will grow at a 13.9 percent CAGR and will surpass spending on non-cloud IT infrastructure by 2020.

Spending for on-premises private cloud IT infrastructure will grow at a 12.9 percent CAGR, while spending on non-cloud IT (on-premises and off-premises combined) will decline at a CAGR of 1.9 percent during the same forecast period.

Monday, January 16, 2017

Technology, Media and Telecom M&A Reached $698.2B

The savvy CEOs anticipate that trends in 2017 are likely to follow the path of disruptive events in 2016. Change is the norm. Digital technology will continue to have a dramatic impact on legacy players in the marketplace.

Technology, Media and Telecommunication (TMT) sectors completed 3,021 deals worth $698.2 billion in 2016, representing a decrease of 4.5 percent in value and 5.7 percent in deal count compared to a record 2015, while deal count remained consistent, according to the latest market study by Mergermarket.

The TMT sector accounted for 21.4 percent of global mergers and acquisitions (M&A) activity -- that's up from 18.5 percent in 2015, and its second highest share on Mergermarket record (since 2001) after 2013 (22.4 percent).


TMT Sector Market Development

Deal activity accelerated towards the end of 2016, with deals announced in the final quarter of the year (683 deals, $295 billion) marking the highest Q4 value on record.

U.S. M&A activity ramped up in the run up to November’s presidential election, with dealmakers looking to complete business before a winner was announced.

High profile mega-deals, such as AT&T’s $105 billion takeover of Time Warner, the largest transaction targeting any sector globally in 2016, and the $34.5 billion acquisition of Level 3 by CenturyLink, were both announced in the month prior to the election.

Such big-ticket deals consequently led to the U.S. being the most active region last year having recorded its second highest deal value on Mergermarket record with 1,101 deals worth $362.7 billion, accounting for 41 more deals compared to a record 2015 (1,060 deals, $393.8 billion), despite a 7.9 percent decrease in value.

According to the Mergermarket assessment, the outcome of the American 2016 election spurred the markets, with dealmakers hopeful that a more business-friendly climate will encourage more mergers and acquisitions in 2017.

Outlook for the Global TMT Market

Europe followed in terms of deal activity, with 992 deals worth $168.6 billion reaching the highest annual value since 2007 ($181.8 billion, 933 deals), while increasing its market share to 24 percent from 19 percent in 2015.

This increase was largely due to a rise in activity targeting Technology (708 deals, $121.3 billion) and Media (199 deals, $29.2 billion), up 72.6 percent and 107.7 percent by value year-on-year, respectively.

Virtual and Augmented reality software apps will be the TMT sectors to watch in 2017. Moreover, sector dealmakers are expected to invest millions into start-ups that are promising to turn new technologies into commercial opportunities in 2017.

Friday, January 13, 2017

Robotic Drone Revenue will Reach $20 Billion in 2020

According to a U.S. government study, advances in Artificial Intelligence (AI) have opened up new markets and new opportunities for progress in critical areas of the American economy. In recent years, robots have surpassed humans in the performance of certain tasks related to intelligence.

Although it is unlikely that robots will exhibit superior intelligence to that of humans in the next 20 years, it is to be expected that they will continue to reach and exceed human performance on certain types of tasks. It's inevitable, more robots will enter the workplace.

Robotics Sector Market Development

Worldwide spending on robotics and related services will more than double by 2020, growing from $91.5 billion in 2016 to more than $188 billion in 2020, according to the latest market study by International Data Corporation (IDC).

"The market for robotics continues to experience tremendous growth," said John Santagate, research manager at IDC. "This growth is really fueled by a combination of technology improvements, expanded use cases, and acceptance in the market."

More than half of all robotics spending comes from the manufacturing with Discrete Manufacturing delivering 31 percent and Process Manufacturing providing 28 percent of the worldwide total in 2016.

This situation will remain relatively unchanged throughout the forecast with the two industries investing nearly $110 million in robotics in 2020. The leading robotics use case in Discrete Manufacturing is assembly, welding and painting, while mixing is the leading use case in Process Manufacturing.

After manufacturing, the three industries with the largest robotics spending in 2016 were Resource Industries ($8.0 billion), Consumer ($6.5 billion), and Healthcare ($4.5 billion). These industries will maintain their relative positions throughout the forecast.

Cross Industry robotics spending, which represents use cases common to all industries, such as warehouse pick and pack, will also rank among the top segments throughout the five-year forecast.

Outlook for High-Growth Robotics Tech

From a technology perspective, purchases of robotics systems -- which includes consumer, industrial, and service robots -- and after-market robotic hardware will total more than $40 billion in 2016.

Services-related spending, which encompasses applications management, education & training, hardware deployment, systems integration, and consulting, will come to more than $20 billion in 2016.

Perhaps the most insightful finding from this global market study, the fastest growing segments of robotics spending are drones and after-market drone hardware, which will grow to nearly $20 billion in 2020.

Thursday, January 12, 2017

Smart Home Revenue will Reach $195 Billion in 2021

Ever since the mainstream adoption of the mobile smartphone, the word 'smart' is used broadly to define any device that has some form of on-board communication connectivity. Likewise, a Smart Home is designed to deliver a number of digital services inside and outside the home, through a range of networked devices.

Juniper Research believes the entertainment segment to be the most viable in terms of consumer uptake, for the simple reason that these services are almost universally desired.

Revenues from smart home hardware and services will reach $83 billion this year, rising to $195 billion by 2021, according to the latest market study by Juniper Research. This revenue upside will be generated through entertainment, automation, healthcare and connected devices.


Smart Home Market Development

The new research also found that home automation and smart appliances will be the two fastest growing segments over the next 5 years, driven by established manufacturers such as Samsung, Bosch and GE Appliances.

Moreover, market leaders such as Alphabet, Amazon, Apple and Samsung will further solidify their position by building on current assets in their cloud services and incumbent device bases.

Juniper believes Amazon's innovative approach, use of cloud services through 'Amazon Alexa', and its ability to capitalize on its eCommerce presence gives the company a leading position in this emerging marketplace.

"The company has managed to maximize its value proposition for Alexa by partnering with a large range of complementary players in the market, while utilizing its own cloud platform to set Echo and Alexa apart from its competitors in terms of functionality," said Sam Barker, research analyst at Juniper Research.

Outlook for Smart Home Applications

The research found that revenue share from the most mature segment, smart entertainment, will slow as emerging market segments such as smart appliances and home automation gain more traction.

The share from connected services, such as Netflix and Amazon, are set to fall from 70 percent of the total market in 2017 to about 50 percent in 2021.

Meanwhile, growing market segments such as Monitoring & Automation will be driven by disruptive entrants -- such as littleBits, Notion and iVee -- who will rival established players by taking novel approaches to product development.

Wednesday, January 11, 2017

Why Autonomous Vehicle Adoption will Grow Slowly

By 2025, just about 15 percent of new passenger car sales worldwide will be autonomous vehicles, with either conditional or full autonomy (level 3 or level 4) capabilities, according to the latest market study by Canalys.

Canalys also estimates that only 1.3 percent of cars sold in 2016 will offer partial autonomy (level 2) and the only cars with conditional or full autonomy in 2016 are for research and development purposes or being used in small public trials.

The few cars available in 2016 with level 2 autonomy come from premium car brands, and the functionality is an optional feature. Autopilot from Tesla, Pilot Assist from Volvo, Intelligent Drive from Mercedes-Benz, and Traffic Jam Assist from Audi and BMW are the leading examples of level 2 autonomy solutions.

Autonomous Vehicle Market Development

The functionality has taken a long time to reach the market in volume, reflecting the slow pace of innovation and the high level of conservatism in the regulation-bound automotive industry. But things are changing: most automotive OEMs have announced launch plans for autonomous vehicles.

"For the first few years of autonomous driving, vehicles will have hybrid autonomy – switching between levels of autonomy depending on the driving environment, the type of road, the speed of traffic or mood of the driver," said Chris Jones, chief analyst at Canalys.

Full autonomy, which does not necessarily need the human driver, will be possible on pre-defined stretches of road, specific lanes of a freeway, zones of a city, campuses or autonomous vehicle-only car parks.

Human drivers will choose what mode to use and the journey could, but doesn't have to, involve a mix of human and machine driving. In full autonomous mode, the vehicles could simply drop off passengers at their destination and drive themselves away to less congested areas to park, or make themselves available to be hailed as a shared transport service.

How we own, use and interact with cars is already changing, according to the Canalys assessment. Fewer young people are obtaining a drivers license -- many prefer alternative forms of transportation. Therefore, Canalys believes that automobile sales will soon start to decrease in large urban markets.

New Trends will Transform Urban Areas

Meanwhile, regulators will embrace the new technology and work with automotive OEMs to help ease the transition onto major highways and urban roads. Moreover, the required autonomous vehicle technology should not dramatically affect the cost of a vehicle. Several things must occur first.

Sensors must get smaller and cheaper. The public must trust the systems and their capabilities must be well communicated. Urban planning will need rethinking to allow for an autonomous future, which would ease and ultimately eliminate congestion and increase safety on large city roads.

Tuesday, January 10, 2017

Application Container Revenue will Reach $2.7B by 2020

Data center server virtualization and cloud computing requirements are evolving. More CIOs and IT managers will be deploying Linux container based solutions in 2017, as the market matures and the vendors gain new momentum with their go-to-market strategies.

The market will grow from $762 million in 2016 to $2.7 billion by 2020, according to the latest worldwide market study by 451 Research. Despite making up a relatively small portion of the overall Cloud-Enabling Technologies (CET) market, application containers will  experience a CAGR of 40 percent through 2020.

The entire CET market  -- which includes virtualization, containers, Private PaaS, and other automation and management software -- is estimated to be worth approximately $23.1 billion in 2017. It is expected to grow at a 15 percent CAGR to $39.6 billion at year-end 2020.


Application Container Market Development

The application container market can be compared to the OpenStack market. But based on the number of vendors currently participating, containers may have a broader impact on the market than OpenStack, which was valued at $1.8 billionn in 2016 and is expected to grow to $5.8 billion at a CAGR of 35 percent by year-end 2020.

Put simply, Linux containers are viewed as highly impactful technology by IT buyers. Moreover, 451 Research analysts believe enterprise adoption of containers and market maturity appears to be happening more rapidly than OpenStack and other adjacent trends, such as cloud PaaS and DevOps.

"Two things stand out from our market sizing and research on containers: the breadth and diversity of vendors basing their offerings on containers or integrating and partnering to better support containers in their products, and the speed at which the container software and market are maturing based on production, use and revenue growth," said Greg Zwakman, vice president at 451 Research.

451 Research has identified and currently tracks 125 application container vendors -- and they expect new market entrants to emerge quarterly, including many yet to be identified as open source container providers.

Although it is still early days, 451 Research finds increased movement beyond early development and testing to the production use of containers. That said, during 2015 there was significant growth of container applications in production among the enterprises that were surveyed.

Outlook for Linux Container Adoption

The trend continued in a survey of enterprise IT buyers conducted in April and May 2016. Of the 25 percent of those enterprises surveyed who use containers, 34 percent were in broad implementation of production applications, and a further 28 percent had already begun initial implementation. The future is bright for new market growth, with associated vendor merger and acquisition (M&A) activity.

Enterprise interest and the presence of a large number of vendors in the market indicate a continuing high level of M&A through 2017 across several market segments -- including management and orchestration, monitoring, security, continuous integration and/or continuous deployment.

Monday, January 09, 2017

IoT Apps for Public Transport will Transform Smart Cities

The Internet of Things (IoT) has many use cases within the public sector, but none will likely have the positive economic impact of comprehensive smart city initiatives across the globe. A key component of these plans is transportation optimization and enhancement in congested urban areas.

Berg Insight released new findings about the growing market for Intelligent Transport Systems (ITS). The market value for ITS deployed in public transport operations in Europe was €1.35 billion in 2015. Growing at a compound annual growth rate (CAGR) of 7.2 percent, this number is expected to reach € 1.91 billion by 2020.

ITS Technology Market Development

The North American market for public transport ITS is similarly forecast to grow at a CAGR of 8.1 percent from €0.59 billion in 2015 to reach €0.87 billion in 2020.

According to the Berg Insight assessment, the market for ITS in public transport is in a growth phase which will continue throughout the forecast period. Increased funds made available to infrastructure spending, demands from travelers and smart cities initiatives contribute to a positive market situation.

A group of international aftermarket solution providers have emerged as leaders on the market for public transport ITS. Major providers across Europe and North America include Canada-based Trapeze Group and Germany-based INIT with significant installed bases in both regions.

IVU is a major player primarily in the German-speaking part of Europe and has also expanded in the North America. Clever Devices and Xerox hold leading positions on the North American public transport ITS market, and the latter also is an international provider of fare collection systems.

Additional companies with notable market shares, according to Berg analysis of the North American market, include RouteMatch, Cubic-owned NextBus, Avail Technologies and TransLoc.

"Similarly to adjacent telematics verticals, the market for public transport ITS has in recent time seen a number of significant cross-border mergers and acquisitions involving European and North American players," said Fredrik Stålbrand, analyst at Berg Insight.

Outlook for Telematics and ITS Growth 

Berg Insight anticipates that the vendor consolidation trend will continue in the upcoming years. "Several players continue to have inorganic growth as a key strategy and further M&A activity can be expected among telematics and ITS providers for public transport in 2017–2018," concluded Mr. StÃ¥lbrand.