The World Is Not Going To End In 2012
Published: January 9, 2012
by Timothy Prickett Morgan
People are unlike computers in a lot of different ways, but one of the similarities is that both machines and members of the Homo sapiens species like to mark time. Computers need to mark time to function properly, and people, well, we do it to get in rhythm with and to push against our environments and, I sometimes think, just to give us a little drama in our lives. I don't know about you, but I have had plenty of drama in the past decade and I would like to declare 2012 a No Drama Zone.
Such a declaration won't work for a lot of reasons, of course, but the first one is that you and I would wither of boredom if there was no drama at all. So let's make a truce. We'll just call it like it is and not go looking for trouble, like the people who are looking at the Mayan Long Count calendar, the 5,125-year calendar that flips to a new cycle on December 21, 2012. (Or 12/21/2012 and isn't that a lot of 1s and 2s?) I was here for the Harmonic Convergence in 1987. Remember that, when the world was supposed to suddenly be more peaceful just because of a dramatic alignment of six of the nine, er I suppose now eight, planets? Anyway, it strikes me sitting here 24 and a half years later that it just didn't work out that way. But such alignments and markings, like a total eclipse of the Sun, are still interesting even if the world doesn't end or suddenly transmute into Eden.
So my big prediction for 2012 is that the world is not going to end, and that is good news for more than just the IT market that we make our livings within. (If I turn out to be wrong, you might be able to get a final text message to me just before the cell networks fail or post a message on Facebook before Big Zuck's data centers go dark. You can tell me I am wrong. . . .)
With the new year just getting going, what everyone wants to know, and perhaps really needs to know, is will this year be better than last year? I have a lot of family and friends who are facing hard times because of this economy, and flipping from December 31, 2011, to January 1, 2012, didn't just magically make all that stuff go away. Such transitions are to give us some built in breathing room, like the count pauses in a NASA rocket launch. People know enough about people to build the circuit breakers in, and that is one of the things that makes Earth civilized. But the same issues facing the first, second, and third worlds, which are moving from geographic-economic distinctions across countries to almost purely economic stratifications in every country, regardless of how rich or poor it used to be on average, remain for us to wrestle with.
Everything you say about the world at large is reflected in the IT microcosm, which used to be about the processing for accounting, manufacturing, and distribution, and is now more about the interactions between people as they work and play. The computerization of every aspect of our lives, right down to predictive analytics that can figure out what we want even before we know we want it, is making some rich and giving some others jobs, but we all know that this efficiency and automation has eliminated many more jobs than it has created over the five decades of computerization. That is the price you pay for progress, and it means we get better products and services--or whole new kinds of services that we couldn't even conceive of before automation--so don't think I am some sort of neo-Luddite. But anyone who tells you computing doesn't eliminate jobs overall in the world and consolidate wealth is either blind or lying, and will probably argue that outsourcing is good for a country when what it really is turns out to be good for a company and bad for a former employee, or won't admit that the number of people who are out of work and can't find enough to support themselves isn't two or three times higher than the official numbers coming out of the Bureau of Labor Statistics.
The Mayan calendar is right about one thing here in 2012. We are indeed at the pivot points for a number of transitions on the political and economic fronts, and the forecasts that are now coming out of the big analysts reflect how these transitions are going to affect IT spending on a macro scale this year.
I have said it before and I will say it again: Harsh economic times force IT infrastructure transitions, and you can pretty much peg transitions from any big, expensive computer to a smaller and cheaper one to a recession and the desire to take something that was not really intended for such and such a purpose and bend it to a new one to save money. I'll give you a good for-instance: The AS/400 is the remains of a number of failed IBM systems projects that were launched in the wake of a recession in 1987 designed explicitly to bring sophisticated database computing to customers at a price point that was impossible with either the System/38 minis or the System/390 mainframes of the time, and it was created because Digital Equipment and Hewlett-Packard were eating IBM's lunch in the systems market. By the way, it was a systems market that was tiny by comparison to what we have today. Anyone can have a system or a cluster of them today, but having a system like an AS/400 was a very big deal back in 1988. It meant you took your business very seriously and probably had a business strong enough to make such a big investment.
Today, you can spend a few pennies an hour and buy a server image on Amazon's EC2 cloud. The world has come a long way, and this ongoing recession--for most of us, the recession that started in December 2007 has not ended--is creating new opportunities for new companies that will probably never own a system of their own until they get so large and rich that they can command the IT talent of an Amazon, a Google, a Yahoo or an eBay. And even then, such companies may decide to heck with it.
Luckily for you and me, the day when everyone outsources their systems to a few big clouds is not yet here, and plenty of spending will be done on servers, storage, networking, software, and services. The forecast last week out of Gartner said that global IT spending in 2011 was a little bit better than the chopped forecast from a year ago anticipated, but that growth in spending was going to cool across the board for computing and telecom products and services.
Specifically, Gartner said that worldwide IT spending rose by 6.9 percent to $3,664 billion across the world's many tens of millions of companies. Enterprise software posted the best growth, with sales up 9.6 percent to $268 billion, with computing hardware seeing a 7.6 percent rise to $404 billion. IT services accounted for $848 billion, up 6.9 percent from 2010 levels. I consider this the core IT market that you and I are usually thinking about when we say information technology, and this slice accounted for $1,520 billion globally in 2011 according to Gartner's math, an increase of 7.6 percent compared to 2010. Gartner also lumps in telecom equipment sales to communications companies, as well as the services that they in turn sell to companies running on that gear into the IT pie, and this telco bit is huge, at $2,145 billion in 2011, but only grew at 6.5 percent. Telecom equipment sales came to $444 billion, while telecom services accounted for $1,701 billion. Yes, this is a phenomenal amount of money to keep a couple of billion people communicating.
Looking ahead to this year, Gartner is expecting that the aftermath of the flooding in Thailand and the disk shortages it has caused will have secondary effects on the server and PC markets throughout the year, much as they did in the latter part of 2011. The debt crisis in Europe and the general economic skittishness in just about every country--even China these days--is going to keep the exuberance from getting irrational. And so Gartner is, for now, only projecting a 3.7 percent increase in overall IT spending globally in 2012, to $3,798 billion. Computers, storage, and software will grow better than the market as a whole, with computing hardware hitting $424 billion (up 5.6 percent) and enterprise software rising to $285 billion (up 6.4 percent). IT services will get stuck in the mud, expanding only 3.1 percent to $874 billion, and the telecom portion of the pie will grow 3.3 percent to $2,215 billion.
Gartner's forecast for IT spending in 2012 will no doubt change as conditions change, much as it did in 2011 and other years gone by.
None of these numbers show the churn that is going on architecturally within the IT sector, as one system is surging and another one is waning, or as tablets and smartphones are augmenting or eliminating PCs, and other such transitions. But there is a lot more sloshing in the numbers as these transitions and augmentations take place. It is no surprise to any i5/OS or IBM i shop that while the progeny spun out from the AS/400 are fine computers, as interesting and useful as they were more than two decades ago, but they are also surrounded by other kinds of computing technology and in many cases relegated to specific roles. While many ISVs are doing fine in the IBM i space and IBM's own Power Systems-IBM i business is back to growing some in 2011 and may do more in 2012, I can tell you that the publishing business, for a lot of complex reasons, has never been tougher. Every publishing company I know is under pressure, and Guild Companies is no exception.
For this reason, we have had to make some changes to our newsletter lineup in 2012. This year, we will publish The Four Hundred every week excepting holidays and during other hiatuses we normally take in July and August. Four Hundred Stuff will be published twice a month, and Four Hundred Guru will also be put out twice a month. We will continue to publish the Four Hundred Monitor weekly wrap-up concurrent with the weekly schedule with The Four Hundred, as has been our normal practice for years.
We remain committed to following the IBM i market, and leading in its coverage and analysis of what goes on with the platform. This is still a good business for IBM, and it is still a good business for us. But it is a different business, and we will be experimenting with some new products and ideas in the future to try to find better ways of informing you and connecting with you. As always, we appreciate the support of our readers and the advertising sponsors that make it possible for us to produce our newsletters.
The world is not going to end in 2012, but as ever, the world is changing. Survive, adapt, repeat . . .
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