Volume 18, Number 36 -- October 12, 2009

News Flash: IT to Drive Economic Recovery

Published: October 12, 2009

by Timothy Prickett Morgan

As long-time readers of The Four Hundred, you know that I like to take a look at how the different server ecosystems stack up and how they have changed over time. As part of some cheerleading about the IT industry in general as the world tries to put together an economic recovery and to help tout its important (but still not completely dominant) position in the general IT ecosystem, Microsoft commissioned the box counters at IDC to case the IT ecosystems of 52 countries and reckon the impact of Microsoft's products on those ecosystems.

The generic IT data put together by IDC is applicable to all server and desktop ecosystems, of course, which is why I bother to bring it up here in this AS/400 newsletter. The amazing thing--and something that Microsoft is to be commended for, I suppose, but this is really just 53 different marketing campaigns that very likely show Windows either being dominant or damned close, so maybe it is more self-serving that we might initially think--is that Microsoft shared the global report as well as all of the individual country reports with the public. You can see them all right here, in fact. There is also an additional global study for the impact that the forthcoming Windows 7 desktop operating system as well as detailed drill-down reports for the United States, the European Union, Japan, and the BRIC countries (that's Brazil, Russia, India, and China, in case you have been asleep under an apple tree for the past three years).

By IDC's reckoning, IT spending in the 52 countries examined will hit an aggregate of $1.41 trillion in 2009, and will account for 98 percent of worldwide spending. The remaining hundred or so countries are noise in the data, although they still generate plenty of business at close to $30 billion. (I'll take that piece gladly!) IDC believes that IT spending will continue to grow at a compound annual growth rate of about 3.3 percent a year, to $1.7 trillion in 2013. Added up, the GDP growth rate in these 52 countries is expected to be about a third of the growth in IT spending; this is still, in many ways, the hottest market there is, and growing more important as time goes by even if the stock prices don't have bubbles like they did a decade ago. Five years ago, IT spending accounted for 2.2 percent of the aggregate gross domestic product of the 52 counties surveyed, it is expected by IDC to be 2.6 percent this year, and will hit 2.8 percent by 2013.

Perhaps more significantly, the worldwide base of IT employees (including corporate and government IT departments as well as techies in the IT vendor community) will number some 35.6 million people this year, and will grow by 5.8 million net new jobs by 2013, for a total of 41.4 million people. IDC reckons that 75,000 new IT companies will be formed over the next four years, most of them small and locally owned and operated; IDC didn't say how many would go under, but I believe the number will be equally large.

Interestingly, the study finds that packaged software across those 52 countries accounts for only 21 percent of total IT spending in 2009, about 51 percent of the IT budget is "software-related." IDC believes that in the 52 countries studied, there are 1.2 million companies that in 2009 distribute hardware, software, or services, employing some 13 million people. There's another 22.6 million people working inside IT departments globally. The IT labor force is expected to grow at 3 percent per year, on average, which is 3.4 times what IDC expects the non-farm labor force in those 52 countries to be.

IDC was charged with not only talking about the global IT ecosystem, but the Microsoft ecosystem within it. The market researcher said that it reckons that there are some 700,000 hardware, software, services, and channel companies that are in some way connected to Microsoft products, as well as the IT organizations that run some form of Microsoft software, account for a stunning 42 percent of the IT workforce in these 52 countries. The companies engaged in creating, selling, or supporting Microsoft-related products (including Microsoft itself, of course) will account for $535 billion of aggregate revenues in 2009. (I am not certain how things haven't been double, triple, and quadruple counted.)

When you do the math that means for every dollar that Microsoft earns, other companies in aggregate earn $8.70 selling whatever it is they sell for a living in this IT racket as it relates to Microsoft products. IDC believes that there are a total of 6.1 million people at work in the Microsoft ecosystem of IT hardware, software, and services companies (about 47 percent of the total), and another 8.8 million employees at IT organizations that work with Microsoft products as part of their jobs (and using a Windows desktop doesn't count, or it would be damned near everyone in the 52 countries). It is interesting to note that within IT organizations, the Microsoft-related employee rate is only 39 percent, so mainframes, Unix and Linux boxes, AS/400s and VAXes, and various database, middleware, and application techies have nothing to do with Windows in terms of their jobs. In fact, the majority of IT employees in the world do not cope with Microsoft platforms as part of their job description, according to IDC.

IDC was not asked by Microsoft to case the other platform ecosystems and how they stack up. I did some estimating on that topic for the various server ecosystems back in 2005, and took a look at the AS/400 ecosystem within IBM back in 1993, as you can see in the Related Stories section below. I have neither the data nor the time to do another ecosystem refresh for the i community, but I would guess there has been some contraction over the past five years. But nothing on the order of the contraction the AS/400-i ecosystem saw from the mid-1990s through the mid-2000s.

In the main global study, which is called Aid To Recovery: The Economic Impact of IT, Software, and the Microsoft Ecosystem on the Global Economy and which you can download here, one of the more interesting charts showed how the IT workforce would change in selected regions over the period of 2009 to 2013. (This chart is on page 8.) In the United States and Canada (what we like to call North America sometimes), the IT labor force is expected to be 10 percent larger in 2013 than it was at the end of 2008, to 12.1 million workers. But in the European Union, the IT labor pool will only grow by 6.4 percent over those five years, to 8.3 million workers. Central and Eastern Europe, by contrast, are seeing a 35 percent growth in the IT pool over those same years, with the Middle East and Africa showing a 31 percent growth in the IT labor pool to 1.35 million workers by 2013, Latin America showing a 35.2 percent growth to 3.12 million workers, and Asia/Pacific growing by 24 percent to hit 15.3 million IT workers by 2013. In case you didn't notice it, Asia/Pacific just surpassed North America in terms of IT jobs, thanks in large part to India and China.


How the Server Ecosystems Stack Up

How Big Is the OS/400 Ecosystem?

The OS/400 Ecosystem, Part 2

TFH Flashback: Critical Mass, November 1993 issue

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Editor: Timothy Prickett Morgan
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