Tech Transformation in the Age of Uncertainty

Stephen Minton
Vice President, Worldwide ICT Markets
sminton@idc.com +44 7435 753922 @stephenminton

IDC ICT Market Data & Analysis

June 20, 2012

Copyright 2011 IDC. Reproduction is forbidden unless authorized. All rights reserved. 1

Competing for 2020 On a New Platform

By 2020, when the ICT industry reaches $5 trillion almost $2 trillion larger than it is today at least 80% of the industry's growth will driven by:
Third platform technologies An explosion of new solutions built on the new platform Rapidly expanding consumption of all of the above in mature economies and emerging markets
The Third Platform for IT Industry Growth & Innovation

In 2012, battles to lead the ICT marketplace of 2020 will start to be won and lost.
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The State of Play IT Industry Growth

Worldwide IT Spending Growth 1996-2014 (%)
15% 10% 5% 0% -5% -10%
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Source : IDC Worldwide Black Book; growth in constant currency 2011 IDC 6-12

The State of Play European IT Market

European Union IT % of GDP IT Taxes ($m) IT Companies IT Workers IT Spending ($m)
8.00% 6.00% 4.00% 2.00% 0.00% 2007 -2.00% -4.00% -6.00% -8.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 IT Spending

2011 2.62% 506,123 393,301 7,879,412 470,930

IT Investment is stalling due to weak business and consumer confidence, in addition to direct impact of government austerity and cutbacks VC funding is surprisingly strong, focused on European firms targeting global market opportunities Long-haul recovery for European IT market is likely, with growth lagging pre-recession levels for next five years

Source : IDC Worldwide Black Book; growth in constant currency 6-12 4

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The State of Play Internet Users

3'000'000'000 Western Europe Internet penetration leveling off at 350 million, but global penetration still surging due to emerging markets growth (especially BRIC), approaching 40% of world population by 2015

2'500'000'000

2'000'000'000

1'500'000'000

Rest of World Europe

1'000'000'000

500'000'000

0 2010

2011

2012

2013

2014

2015

Source : IDC Information Society Index 2011 IDC 6-12 5

The State of Play Internet Penetration

Mobile Internet penetration still surging in mature economies and emerging markets; broadband penetration is slower in some emerging markets; more than a third of population in Europe now using mobile web 90%

80%

70%

60%

50% World 40% Europe

30%

20%

10%

0% Internet Broadband Source : IDC Information Society Index 2011 IDC 6-12 6 Mobile Internet

The State of Play European Internet

Younger than 5 5 to 14 15 to 24 25 to 39 40 to 54 55 or older Wired Mobile

Personal Small Business Medium/Large Business Government Education Source : IDC Information Society Index 2011 IDC 6-12 7 PC Non-PC

Western Europe Internet Devices

600'000'000

500'000'000

400'000'000

300'000'000

PC Non-PC

200'000'000

100'000'000

0 2010 2011 2012 2013 Source : IDC Information Society Index 2014 2015

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Worldwide Internet Device Spending ($m)

800'000 700'000 600'000 500'000 400'000 300'000 200'000 100'000 0 Feature Phone Smartphone Tablet PC

Source: IDC Worldwide Black Book

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Information Society Index

Benchmarks countries according to socio-economic impact of technology, Internet and telecoms usage Technology categories: PC households, mobile phone subscribers, Internet users, mobile Web users, broadband penetration, e-commerce spending, packaged software spending Social variables: Civil liberties, education (secondary and tertiary), corruption Weightings: GDP, population, households Index created in 1995

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Information Society Index 2011

Source : IDC Information Society Index 2011 IDC 6-12 11

2012: Transformation Amidst Chaos

A Year of Instability in ICT Markets, European economy in crisis, but key ICT transformations Continue:
ICT market expansion through

disruptive Cloud model, driving rearchitecture of vendor models, platforms, identities, policy apps the post-PC era begins

Ascendance of mobile devices and Shift of customer design point toward

SMB/consumer, emerging markets

Infrastructure challenges continuing

growth of digital information on servers and networks, security challenges

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Weve been down this road before

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From IT Doesnt Matter

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.to the Next Web

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Network Evolution.

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..to Network Revolution

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Internet of Things Part 1

8'000 Units Installed Worldwide (millions) 7'000

6'000

5'000

Computers Handhelds

4'000

Networking Industrial/automotive

3'000

Embedded Household

2'000

1'000

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 2017 2018 2019 2020

Source: IDC Everything Network

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Internet of Things Part 2

1'400'000 Units Installed Worldwide (millions) 1'200'000

1'000'000

800'000 Sensors and Tags 600'000 Everything Else

400'000

200'000

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 2017 2018 2019 2020

Source: IDC Everything Network

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The Information Explosion Continues

35'000 30'000 25'000

40,000 30,000

20'000 15'000 10'000 5'000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 -

Imaging Data Voice

20,000 10,000 0

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

Source: The Expanding Digital Universe, IDC; sponsored by EMC

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20

The Transaction Explosion Continues

Internet Commerce-Related Transactions

Billions WW
100 90 80 70 60 50 40 30 20 10 0 2006
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2007

2008

2009

2010
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Source: IDC Internet Commerce Market Model

The E-Commerce Explosion Continues

Total E-Commerce Spending ($billion) Billions 18'000 16'000 14'000 12'000 10'000 8'000 6'000 4'000 2'000 0 2010 2011 2012 2013 2014 2015 Rest of World Europe

Western Europe E-Commerce ($billion) Billions 3'000 2'500 2'000 1'500 1'000 500 0 2010 2011 IDC 2011 2012 2013 Billions 3'500 18'000 16'000 14'000 12'000 Wireline 10'000 8'000 Mobile 6'000 4'000 2'000 0 2014 2015 Source : IDC Information Society Index

Worldwide E-Commerce ($billion)

Wireline Mobile

2010 2011 2012 2013 2014 2015 6-12 22

New Information on the Network

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Appetite for Transformation

Mobile Apps

Infrastructure Transformation

New Data Analysis

Cloud Computing

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Mobility Explosion Accelerates

Mobile devices & users surge, poised to challenge PC, radically expand market Mobile data services spending will pass fixed data spending for the first time Media tablets will soar, with iPad holding a big lead and Microsoft joining the party Mobile apps war led by Apple and Google continues as stakes get huge The "app store" phenomenon will spread to PC and next-gen enterprise solutions Emerging markets will begin to dramatically transform the market
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Cloud Adoption Mainstreams

Public cloud services adoption will grow at over four times the rate of the IT industry Cloud services spending will exceed $36 billion this year 2012 is a big year for private cloud services adoption and deployment Two cloud power positions
The platform-as-a-service (PaaS) battle will

determine "the next Microsoft"

Battle for hybrid cloud management

Death of cloud computing by 2012

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Western Europe Public Cloud Services Spending ($m)

8'000 7'000 6'000 5'000 4'000 3'000 2'000 1'000 0 2010 2011 2012 2013 2014 2015 SaaS PaaS IaaS

Benelux France Germany Italy Nordics Spain U.K. Other Source : IDC European Public Cloud Services Forecast 2011 IDC 6-12 27

Big Data: Management & Analytics

The "digital universe" will grow to 2.7ZB in 2012, up 48% from 2011, and rocketing toward nearly 8ZB by 2015 Continuing buying spree to strengthen vendors information management capabilities "Compliant clouds" will become standard fare In a world of increasingly "big data," realtime, pervasive analytics offerings; new methodologies for data collection

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Social Business Gets Serious

Enterprise software vendors will get more aggressive, drive a lot of M&A Facebook aims at becoming the B2C platform of choice Businesses and government focused on opportunity and risk, new policies to control explosion of social media and blurring of lines between business/ personal usage Privacy concerns on the rise mobile location-based advertising Socio-economic impact could be profound
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European Social Network Survey

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Essential Guidance
Technology and Internet transformation continues, despite economic uncertainty:
Mobile devices have won decisively as we

enter the post-PC era Cloud platform battles will take hold Social technologies will be a must have, despite concerns over security and privacy Digital Universe continues to explode Big Data will be essential capability Emerging markets are already the new center of growth, driving new design points Internet of Things will be dominated by non-traditional IT and machine-to-machine communications
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Contact Information

Please email me at sminton@idc.com

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