Gazing into the IT crystal ball

With 2005 proving to be a relatively successful year despite the conservative predictions made by many industry analysts, predicting the trends for 2006 is proving to be even more challenging.

Guy Whitcroft, 25-year veteran of the local IT industry and chief executive officer of Tarsus Technologies, provides perspective on the year that was and what 2006 will hold in store.

"In the corporate arena, we`ve seen a reasonable volume of sales attributed to the last of the Y2K replacement cycle in the corporate sector," Whitcroft says. "This, I believe, will slowly come to an end, making way for corporates to focus on new projects that deliver bottom line value.

"That said, however, I believe the adoption of Windows Vista will drive the next replacement cycle as the operating system will require more powerful hardware," Whitcroft continues.

Interestingly enough, Whitcroft says the reason the market needs to rely on events such as the release of Windows Vista to drive replacement cycles is simple. Replacement cycles are becoming longer each year.

"The effective life of PCs has undoubtedly increased since the mid-90s. We`re now seeing desktops lasting around five years, whereas servers can last much longer as they can easily be redeployed to less onerous tasks if the software demands become too high. Notebooks typically last about three to four years on average, partly due to them having a tougher life as they get taken around everywhere.

The interesting trends stretch beyond the traditional corporate sector though. Whitcroft says some interesting trends are coming out of the SMB, SOHO and consumer markets, which are touted as the most unexploited space in the local market.

"In the SMB sector, the rise in the number of SMB businesses, coupled with their increasing recognition of the advantages of using IT, for example access to wider markets, more efficiency and reduced costs, are driving growth. Likewise, in the SOHO and consumer markets the drivers are around access to computing facilities like e-mail and the Internet.

"In my opinion, this trend will continue into 2006," he adds.

"Overall, I think 2005 will end with a moderate increase in unit sales, most likely around the 12% mark, represented by a 20% to 25% increase in notebook sales and an 8% to 10% increase in desktop sales.

"In dollar terms, the increase is likely to be only slightly less - probably 8% to 10%, as I believe prices are stabilising. Over the coming year, we may even see small increases in some component costs due to demand meeting and in some cases slightly exceeding supply."

Looking next at external trends affecting behaviour in the IT space, Whitcroft says that in all cases, the long-delayed introduction of the SNO will probably add further impetus to the market as this is likely to drive bandwidth prices down, allowing companies and individuals more affordable high-speed connections and a consequent increase in hardware requirements.

"The biggest driver in SA in the near term will be reducing bandwidth prices encouraging people to get access to the Internet. This will probably also encourage the uptake by staff of older corporate PCs as they can be used more effectively.

"I wouldn`t be surprised if some corporates introduced schemes to give their staff low-cost access to the Internet by aggregating bandwidth in this scenario," he says.

Looking forward, Whitcroft says the SMB will remain the strongest growth area, and narrow the gap in sales between this market and the corporate market. "The government use will depend largely on their ability to roll PCs out into education. If they go on a concerted drive in this arena, government purchases will also grow strongly," he concludes.