Watch Out For A Potential Glut Of “Dark Cloud” IaaS

Back during the dot.com boom years, existing telcos and dozens of new network operators, especially in western Europe and North America, laid vast amounts of fiber optic networks in anticipation of rapidly rising Internet usage and traffic. When the expected volumes of Internet usage failed to materialize, they did not turn on or “light up” most (some estimate 80% and even 90% on many routes) of this fiber network capacity. This unused capacity was called “dark fiber,” and it has only been in recent years that this dark fiber has been put to use.

I am seeing early signs of something similar in the build-out of infrastructure-as-a-service (IaaS) cloud offerings. Of course, the data centers of servers, storage devices, and networks that IaaS vendors need can scale up in a more linear fashion (add another rack of blade servers as needed to support an new client) than the all-or-nothing build-out of fiber optic networks, so the magnitude of “dark cloud” will never reach the magnitude of “dark fiber.” Nonetheless, if current trends continue and accelerate, there is a real potential for IaaS wannabes creating a glut of “dark cloud” capacity that exceeds actual demand, with resulting downward pressure on prices and shakeouts of unsuccessful IaaS providers.

Read more

Canadian ICT Market Will Be Similar To US In Growth Rates, But Differs In Product And Industry Mix

On the same day that we published our latest forecast for the European ICT market, Forrester has also published our forecast for the Canadian tech market (see June 8, 2011,“The Canadian Tech Market 2011-2012 -- Different From US In Industry Mix of Purchases; Similar Growth Rates").   The following are my key takeaways from this report:

  • The Canadian market for purchases of information and communications technologies (ICT) by businesses and governments is about 10% the size of the US ICT market, and only about 3% of the global ICT market.  Still, it is an important market because of the sophisticated level of its tech adoption (i.e., its readiness to adopt advanced technologies) and its proximity to the US market.  
     
  • Canada's ICT market growth rates of 6.2% in 2011 and 2012 growth of 8.1% in Canadian dollars will be very similar to the US ICT market growth in US dollars in the same periods.  With the Canadian dollar having gained strength against the US dollar, that means that US vendors will see even stronger Canadian revenue growth when they convert their Canadian sales back into US dollars. 
     
  • Communications equipment and software will have the strongest growth in 2011, at 10.5% and 8.4%, respectively.  Computer equipment growth of 4.4% and telecommunications services growth of 2.2% will be the weakest product categories.
     
Read more

European ICT Market Will Grow More Slowly Than US Market, But With Wide Geographic Variances

I am in Barcelona, Spain, at our IT Forum EMEA event, where my colleague Peter O'Neill and I presented our latest forecasts for the tech market in Western and Central Europe.  In parallel, Forrester has just published our report with this and much more information (see June 8, 2011, “European Information And Communications Technology Market 2011 To 2012 -- The North-South Divide Persists, With Wide Variations In Country Information And Communications Technology Growth”).  Here are the key conclusions that I would highlight from the report:

  • As a geographic unit, the market for business and government purchases of information and communications technologies (ICT) in Western and Central Europe will grow by 3.8% in 2011 (measured in euros), compared with 6.4% growth in the US (measured in US dollars).  Excluding slow-growing telecommunications services, the information technology (IT) market in Western and Central Europe will grow by 4.5% in euros vs. the 7.4% growth in US dollars in the US (see June 7, “European Information And Communications Technology Market 2011 To 2012 -- The North-South Divide Persists, With Wide Variations In Country Information And Communications Technology Growth”).
     
Read more