Report: Half of IT suppliers will soon be dead

LONDON (12/05/2003) - Half of all technology suppliers will be dead by the end of 2005, according to the latest doom-saying report from Gartner Inc.

There are 50 to 60 percent too many software companies in the world at the moment said one Ian Bertram, doomsayer-in-chief at the research company. By 2008, a wave of bankruptcies, mergers and takeovers will see a huge shake-up in the IT market -- companies going down the toilet, CEOs begging for spare change, once-proud white-collar workers in your local Tesco, that sort of thing.

All this trauma will be induced by a massive outsourcing of IT functions (an increase of 30 percent in the next two years) and a shift to more modular software, Bertram claims. Companies' current software is coming to an end of its usefulness and they will decide to tie main systems into Web services.

"Software code will be generated for a Web services environment. I can get a new service, and suck that code into my environment, rather than re-coding or paying for a coder," he warned. This means no more big development projects, rather small groups of developers and business analysts tacking extra functions onto an existing and flexible framework.

Bad news for Microsoft Corp. too. Apparently the move towards Linux is unstoppable. Just next year in Australia for example, 90 percent of all large companies will be using open source software. Blimey.

But Guru Bertram can see a new dawn at the end of this terrible era. IT spending will continue to rise (by roughly 4 percent) and the upheaval will usher in fantastic innovations the likes of which mankind has never seen in roundabout 2007. Plus outsourcing companies should do well out of it.

But before IT suppliers run screaming from the room, it may be best to review Mr Bertram previous pronouncements. It seems as though coding fire-and-brimstone is one of this vice-president's specialities.

Take this strangely familiar quote from the morose Mr Bertram from 18 months ago. "The IT industry faces accelerated job losses and vendor consolidation that will last through 2002, and as many as half of all IT suppliers that existed in 2001 will disappear from the competitive landscape by the end of 2003, as they are acquired or go out of business." Hmmm.

That time it was because companies were going to use their existing IT resources and not buy any new stuff. "To minimize new investments in IT infrastructure, many organizations will identify and redeploy underutilized server and storage resources," said Bertram.

The year before -- 2001 -- Gertram was again forecasting doom -- this time due to the proposed Compaq Computer Corp./Hewlett-Packard Co. merger. The two companies merging would "create confusion in the market" he warned. "This will also be devastating for some distributors and resellers, particularly those who deal exclusively in either company's products," he added. But we shouldn't worry because it was unlikely that the U.S. regulators would let the deal go ahead anyway. How right he was.

So who is this Doom-monger General? Well, Mr Bertram is the Gartner's VP of Hardware Platforms for Asia Pacific. He joined in 1999, having spent the previous 10 years at IBM Corp. IBM is very big on this Web services stuff at the moment. He is also one of Gartner's star PR men -- pulled out and spun round the media outlets, giving good quote and getting the Gartner name up in lights. From his vantage point in Singapore, he sees all and then relates to the world the devastating news. Year after year.

He also knows that bad news travels faster. So you would do well to keep a pinch of salt by your computer the next time you learn of the IT industry's forthcoming apocalypse.

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