The fourth-quarter earnings reports of key tech companies were generally favorable, perhaps indicating the tech market will not be as much in the doldrums as many observers thought, Andrew Bartels, a vendor strategy analyst for Forrester Research, says in his latest blog. http://www.forrester.com/rb/analyst/andrew_bartels.  Bartels examined the most recent financials in the wake of his recent blog post “The Ten Potential Developments That Could Shape The Tech Market In 2012”Bartels’ key takeaways from the financials were the following:

• The corporate software market is still showing strength. While IBM's overall revenues were up just 2%, IBM's software group revenues were up 9%, with its Websphere products up 21%.
• Microsoft's revenues rose just 5%, but its revenues from sales to business of servers, tools, and applications rose by 10%, with servers and tools and Microsoft Dynamics both up by 11%.
• On January 25, Computer Associates reported a 10% increase in its revenues, and EMC's software revenues had (by our estimates) a 20% gain in its software revenues, led by VMWare's 27% growth.
• On January 26, SAP’s license revenues in euros rose by 16%, with total revenues rising by 11%. So, the corporate software market was in much better shape at the end of 2011 than Oracle's numbers of 2% license revenue growth and 7% software revenue growth implied. 
• Computer equipment market is at best slowing significantly, if not in decline. IBM's Systems & Technologies group had an 8% decline in its revenues, with server revenues down 10% and storage device revenues down 3%.
• EMC does not break out its storage hardware numbers from its storage software numbers, but we estimate that EMC's storage hard revenues rose by 3% to 5%.
• The 10% decline in the revenues of Oracle's Sun division and its 14% drop in hardware revenues is looking like a harbinger of tough times for other server vendors like Dell, HP, and Fujitsu. The IT services market is mixed, depending on the vendor.
• IBM's IT consulting and outsourcing revenues grew by just 3% in Q4 2011. TCS, and Wipro reported Q4 2011 revenue growth that ranged from 12% for Wipro to 24% for TCS. Those results were in line with Accenture's 17% growth for its quarter ending on November 30, 2011.
• Other services vendors like Cognizant and Capgemini are likely to have revenue growth in the same range. On the other hand, vendors like CSC and HP are likely to post revenue growth in the low single-digit range, like IBM.
• The corporate PC market is feeling the impact of Apple. While the major PC vendors like Dell, HP, and Lenovo will not release their results for several weeks, Microsoft's reported 6% decline in Windows revenues are pointing to similar declines in PC vendor revenues. Microsoft did indicate that sales of Windows to business rose while those to consumers fell.
• Meanwhile, Apple reported a 22% increase in its Mac revenues and a 99% increase in its iPad revenues, with sales to businesses and business users likely to have risen by at least this much. Confirming that trend, Apple officials during the earnings call rattled off a long list of corporate customers.
• Apple is clearly growing in the corporate market at the expense of Wintel PCs and tablets. Bartel concluded that the implications for the 2012 tech market of this first wave of Q4 2011 financial results are in line with Forrester’s forecast — a slight slowdown in growth due to European economic and financial problems, but still reasonably good growth prospects.  

Platform as a service (PaaS) is a core layer of the cloud computing architecture, and its evolution will affect the future of most users and vendors in enterprise software markets, according to Gartner, Inc.

PaaS is a common reference to the layer of cloud technology architecture that contains all application infrastructure services, which are also known as "middleware" in other contexts. PaaS is the middle layer of the end-to-end software stack in the cloud. It is the technology that intermediates between the underlying system infrastructure (operating systems, networks, virtualization, storage, etc.) and overlaying application software.In 2012, the PaaS market is at its early stage of growth and does not yet have well-established leaders, best use or business practices or dedicated standards. The adoption of PaaS offerings is still associated with some degree of uncertainty and risk.

"With large and growing vendor investment in PaaS, the market is on the cusp of several years of strategic growth, leading to innovation and likely breakthroughs in technology and business use of all of cloud computing," said Yefim Natis, vice president and distinguished analyst at Gartner. "Users and vendors of enterprise IT software solutions that are not yet engaged with PaaS must begin building expertise in PaaS or face tough challenges from competitors in the coming years."The technology services that are part of a full-scope comprehensive PaaS include functionality of application containers (servers), application development tools, database management systems, integration middleware, portal products, business process management suites and others — all offered as a service."However, PaaS products are likely to evolve into a major component of the overall cloud computing market, just as the middleware products — including application servers, database management systems (DBMSs), integration middleware and portal platforms — are the core foundation of the traditional software industry," Mr. Natis said. "The tension between the short-term risk and the long-term strategic imperative of PaaS will define the key developments in the PaaS market during the next two to three years."

(Contact: Gartner Special Report "PaaS 2012 — Tactical Risks and Strategic Rewards," www.gartner.com, Christy Pettey 408/468-8312, christy.pettey@gartner.com).

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(Contact: Insight Research, 973/541-9600,  http://www.insight-corp.com).

(Contact: Mario Lombardo, mlombardo@idc.com, +44 [0]208 987 7239, www.idc.com).

Global networking hardware and software industry will be driven by rapid proliferation of the Internet across business and geographies Global Industry Analysts, Inc. says. Demand will remain especially strong in emerging markets of Asia-Pacific, Latin America, and Eastern Europe. The last couple of decades have witnessed a broad sweep of technological developments in computer networking. Computer networking speeds are accelerating significantly beyond the standard 10-Gigabit Ethernet (GbE). From data transmission speeds of 100 megabits per second to 10 gigabits per second to now over 100 gigabits per second, networking speeds have been evolving in sync with growing business needs. The massive data explosion triggered by bandwidth heavy multimedia content, such as, video, voice, multimedia, has and will continue to throw the focus on data transfer rate capability of computer networks.

Against this backdrop, the network and data communications equipment market is opening up fast due to rising need for connectivity, new applications based on Internet Protocol (IP) and concerns of business firms for security of business data. The market segments of wireless LAN (Local Area Network) equipment continue to expand, as it provides higher mobility and in turn, a greater flexibility within an organization. In order to make use of faster Ethernet technologies such as Gigabit Ethernet and Fast Ethernet, LAN hardware has begun to shift from hubs to switches, which provide faster inter-connections. In the Router segment of the market, there is increased demand for the gigabit IP products arising out of the increased use of RAS (Remote Access Servers), VPN (Virtual Private Networks), switching and importance of security issues. However, competitive prices in lower-end product segment are expected to act as a hindrance. The increased need for Remote Access Connectivity, e-commerce, Intranets and Internet, is expected to generate additional demand for greater bandwidth and higher speed in the LAN market. In the communications segment, increasing demand for high-speed connection, greater bandwidth and uninterrupted connectivity increases the growth potential of this segment. Even though analogue modems still hold a major share in the developing countries, sales of ADSL routers and modems have improved substantially in recent years. About 52% of enterprises are planning to increase their network equipment spending in the short to medium term, which augurs well for future of this market. Realizing the benefits of having strong network connectivity, SMBs, which hitherto stayed away from making huge IT infrastructure investments too are gradually increasing their network spending. Healthcare, Financial services, and the government sector will be major target markets for network equipment vendors, as these segments will continue to remain major spenders. Network security, Wireless LAN, VoIP and WAN optimization will be some of the major investment areas in network market. 

(Contact: Global Industry Analysts, Inc., 408/528-9966, http://www.StrategyR.com/).

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The global security software as a service market will grow at a CAGR of 28.4 percent over the period 2010-2014, according to MarketResearch.com. According to the report, one of the major driving factors for all IT Security markets is growing compliance requirements. Although some of the sectors such as financial services, healthcare, and online retail are the most strictly regulated, companies from other sectors also have to comply with multiple regulations. Data breach or insider theft may lead to reputational as well as financial loss. Hence, to protect their infrastructure as well as to protect the clients' interest, the companies are adopting security solutions. That’s why global security software as a service market has been witnessing increases in security SaaS offerings from large vendors. However, slow development of some security SaaS verticals could pose a challenge to the growth of this market. 

(Contact: MarketResearch.com http://www.marketresearch.com/Infiniti-Research-Limited-v2680/Global-Security-Software-Service-6773784/).

A mixed global economic outlook, high levels of volatility, weak consumer demand, and ongoing corporate uncertainty continue to impact outsourcing demand and consulting growth, according to the KPMG 4Q11 Sourcing Advisory Pulse Survey of KPMG field advisors and leading global business and IT service providers released last week.

The study also found that organizations engaged in outsourcing are recognizing the need to invest in IT-enabled solutions, but must overhaul business and operating models to fully exploit the technologies' potential. "Buyers are placing great emphasis on investing in IT, but given the economic uncertainty, all efforts undertaken will occur under watchful, cost conscious eyes," said Stan Lepeak, global research director in KPMG's Management Consulting Group.  "Buyers and providers are smarter, more experienced, and less likely to enter into larger and more risky deals, and evolutionary innovations such as cloud computing and targeted BPO are changing the nature of what constitutes outsourcing."

Some 73 percent of advisors and 79 percent of providers polled cited the weak economy as likely having the biggest impact on buyer businesses and operations, especially in Europe. However, there are positive signs for improving economic growth in some western markets, such as North America, and emerging market growth still is expected to be strong: 53 percent of advisors and 45 percent of service providers responded that improving global economic conditions would have the biggest positive impact on their clients' businesses in 2012, suggesting large scale outsourcing deals will accelerate as the economy improves. Perhaps indicative of questions about the health of the larger economy, 61 percent of service providers reported deal pipeline growth over the past quarter, a drop of 15 percent from Pulse results three months earlier.  Additionally, only 45 percent of providers expected the pace of customer demand for business and IT services to increase over the next one to two quarters, representing a drop of 14 percent from the third quarter and a substantial 29 percent from the second quarter. For many buyers, outsourcing offers a path to accelerate this adoption in a more cost-effective manner.  Some 56 percent of advisors, up 10 percent from the third quarter, reported that buyers were using process improvement and reengineering to improve service delivery. Among the top initiatives expected this year from clients are the somewhat contradictory drives to lower costs and investment in new or improved information technology, including enterprise systems, business intelligence, cloud, and social media.  Lower costs were the top 2012 client initiative, according to 69 percent of advisors and 79 percent of service providers responding.  Technology investment came in second, cited by just over 50 percent of advisors and 62 percent of service providers. 

(Contact: KPMG LLP, John Cline, 201/307-8169, jcline@kpmg.com, www.kpmg.com).

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