Tech to see 'Google effect' next year

Tech companies will need to perform a "gut check" to respond to the influence of Google and open source, according to IDC.
Written by Graeme Wearden, Contributor

Next year will bring moderate growth in IT spending, which will push many vendors into taking the plunge and developing some disruptive business models.

That's the view of analyst group IDC, which on Thursday published its predictions for the coming year.

IDC predicted that global spending on IT would grow by 5.5 percent in 2006. Coming on the back of 6 percent growth in 2005, this will force more technology companies into offering IT as a service, predicted Frank Gens, senior vice president of research at IDC.

"A critical new ingredient we'll see [in 2006] is the acceleration of disruptive business models; 'open innovation' in IT product and service development--the open-source effect--and online delivery of IT as a service--the Google effect," Gens said in a statement. "These disruptive shifts will force most vendors to perform a strategic 'gut check' as they enter the year."

The "Google effect" that Gens described would be prompted by the fear that the search giant will dominate more markets in the years ahead.

"While much of this disruption will be years in the making, and will be overhyped in 2006, the more important impact of 'Google as a disrupter' will be as a spur for traditional suppliers to disrupt themselves before competitors do. This will be evident in enterprise applications, information management and IT services," IDC said.

Gens also believes that open-source-like collaboration will grow in popularity.

"Most of the big market share leaders in IT--e.g., Microsoft, IBM, Oracle, SAP--got that way by keeping tight control over their own product development. The 'go it alone' model of innovation is an endangered species in the IT industry, and incorporating a community-based innovation model--e.g., open source--is quickly becoming an important ingredient for market leadership," IDC said.

"In 2006, IDC believes that building more open innovation communities will be a big focus for IT leaders--including Microsoft," the analyst firm predicted.

This year has seen a clutch of acquisitions, from Adobe Systems' merger with Macromedia to eBay's purchase of Skype. IDC expects that this trend will continue in 2006, as few vendors have finished reshaping themselves.

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