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Internet of things will lead to casualties

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 26 Sept 2014
Companies that fail to adapt to the next tech wave will collapse.
Companies that fail to adapt to the next tech wave will collapse.

A shake-up is set to hit the ICT industry within the next decade as the Internet of things becomes an increasing reality, leading to the demise of companies that fail to embrace the new era of computing.

Already, firms like Amazon are embracing the future, with its plans to test Internet-connected "smart" home gadgets, while Google has been getting its tentacles into everything. Google is buying up seemingly unrelated companies - such as Songza - at an ever-increasing rate to own the future, and the customer of the future.

Independent analyst Paul Booth notes ICT will enter its fourth evolution phase in around 2025, a situation that will challenge today's leading companies. He says the IDC has defined three evolution stages: mainframes from between 1960 and 1985; client and server-based computing between the mid-1980s and mid-2000s; and the current phase, which started around 2008 and moves towards mobility, big data, social media and cloud computing.

The next phase of the evolution is a "full-blooded digital world," says Booth, adding this will be the Internet of things "plus". He notes computing will move more closely to the human, with 3D printing being used to replace organs, and implants that go beyond wearables.

Hard to do

Booth notes there is no easy transition between the IDC's three stages, and moving from one phase in technology's evolution to the next requires starting from "scratch".

Previously, shifts in the IT environment - from mainframe computing to client-based and onto mobility, data, cloud computing and social media - have led to collapses, with companies such as Kodak, while others, such as Sun Microsystems, have been bought out. Booth notes growth coming from historic system providers is less than 1% currently.

The evolution of tech companies on the Fortune 500:

2014:
15 Apple
34 AT&T
42 Verizon Communications
50 Hewlett-Packard
53 Nippon Telegraph & Telephone
55 China Mobile Communications
104: Microsoft
112 Amazon.com
162 Google
222 Fujitsu
286 Lenovo
306: Oracle
2004:
16 Nippon Telegraph & Telephone
28 Verizon Communications
19 IBM
24 Hewlett-Packard
38 Deutsche Telekom AG
49: Vodafone
90 Fujitsu
93 Dell
130 Microsoft
232 Electronic Data Systems
366 Computer Sciences Corporation
460 Accenture
1995:
15 AT&T
16 Nippon Telegraph & Telephone
21 IBM
40 Deutsche Telekom
61 Fujitsu
97 Hewlett-Packard
148 Canon
Source: http://fortune.com/global500/

In addition, the top ICT companies are increasingly being challenged by Chinese firms such as Lenovo, ZTE, Huawei, Alibaba and Tencent, says Booth. He notes there will also be an emergence of many new entrants that come out of different verticals and focus on aspects such as the cloud, data, social media and mobility.

Most of the companies listed in the Fortune 500, which play in the tech space, are not even exploiting the third phase, never mind the fourth, says Booth. He anticipates this phase to be entered into around 2025 - a mere decade away.

Booth says the result will be more casualties in the market, in the same way as companies died when the second phase hit, such as Data General, which did not transition from mainframes to client services.

Pure hardware will cease to exist except in specialised areas, such as cloud computing, and everything will be based on services, adds Booth. Software companies will suffer the same fate as hardware entities did in the 1960s if they do not change and embrace the shift to the cloud, he notes.

Change is happening

According to a presentation by senior VP and chief analyst Frank Gens at IDC Directions in March, the sector is moving from an era of digitisation into one of "materialisation" with cognitive systems, robotics and 3D printing coming to the fore. "Don't wait seven years to position for the next platform," he warned.

Other shifts the IDC notes include that global cloud infrastructure will double within two years, while the number of intelligent edge devices will increase two-fold in the next five years. In addition, said Gens, more than 80% of new cloud apps will be hosted by the top six platform as a service providers.

Gens also noted data-centric platforms are emerging, and as much as 80% of new cloud apps will be big data-intensive.

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