2009 predictions

LANtech's IT predictions for 2009

½ Year Follow-up

By Paul McQuinlan, Managing Director

So how accurate were our predictions for 2009 ?  The ‘credit crunch' is still upon us and it is said that we won't see the other side of the downturn until well into next year or even beyond.  Reality is that the economists don't really know, they guess as much as the rest of us.  Yet we have certainly seen a slow cautious return of business confidence and people saying "‘too hell with the recession, let's just get on with it..".  So how has this impacted what is happening in IT?

1. Reducing hardware costs

The full impact of the exchange rate will hit most technology products early in 2009.  Most vendors are holding back on increasing prices until after Xmas.  But after an initial surge in pricing we will then see a continuing trend of technology costs coming down.  In particular DDR3 memory and notebook pricing is forecast to come down as production volumes increase.  Competition on desktop PCs will also drive prices of these down further.  Printers will continue to commoditize with new colour lasers hitting the market at greatly reduced prices.

This has fairly much occurred already.  We haven't returned to the pricing we saw pre-Xmas 2008, but we have seen price drops in areas such storage, memory, notebooks, PCs and printers.  I fully expect that this trend will continue.

2. New IP Telephony Systems, ICT Convergence, Unified Messaging

IP Telephony will finally come of age with almost all new phone systems going in as IP based.  This will allow far greater integration with organisation computer contact management systems, being able to phone numbers directly from Outlook, having capabilities such as ‘Point of Presence' where your phone system will know if you're in the office or out based on your electronic diary or whether you're at your computer.   The boundary between the phone system and the computer system will finally begin to disappear - ICT Convergence and Unified Messaging are the terms being used, and it's likely to really start happening during 2009/2010.

If your looking for a new phone system then your most likely to be looking at IP phone systems, if not you really should be, anything else is rapidly becoming obsolete.  However, unified messaging has been slow to catch-on.  Microsoft and Telephony vendors still have substantial work to do in this area before we see any really substantial market impact.

3. Greater Mobile take-up - Telecom's new 3G GSM network

June 2009 Telecom will release it's new Mobile GSM 3G network.  This is heralded as providing faster data capability, greater capabilities beyond just voice and text, and finally Global Roaming that actually works.

The new network will also mean a whole host of new phones (nope, can't use the old phone) with multiple application support like we are already seeing on phones like the Apple iPhone.  This will bring about a demand for more integration to organisation communication services such as telephony, email and calendaring.

Well, this wasn't a hard one to predict.  Telecom's much heralded ‘XT Mobile' network has now finally arrived, and people are not exactly clambering to replace their phones, but Telecom has certainly not disappointed with the take-up of the new service.  This has not yet flowed through in the anticipated surge of demand for IT to mobile phone integration, but that is still expected once the capability of the new phone is realised.  However demand for such services is likely to be dampened by the high cost of mobile data in this country.

4. Windows 7 or Vista?

Will we see Windows 7 in 2009?  It seems unlikely.  Microsoft are sticking to their story that it will be a 3 year development (they started in 2006?) and so it's release is unlikely to be seen until at best 2010.  So we're stuck with Vista through 2009 but we can look forward to Service Pack 2 for Vista being released in February.

We were proved wrong on this one.  Microsoft has announced it's release of Windows 7 for October this year and it's take-up is likely to be a lot stronger than that of Vista.  Pre-release versions have already shown it to be robust and perform significantly better than Vista, even outperforming XP on many hardware platforms.

5. Malware, viruses, phishing - all on the increase..

Expect a new surge in malware during 2009.  These nasties are becoming increasing sophisticated and are beginning to diversify into mobile devices and other operating systems.  Email phishing (using emails and fake websites to obtain credit card and other personal data) are also becoming more difficult to detect.  Expect to see the emergence of even more diverse methods of cyber crime in 2009.

They're still out there and continue to plague us.  We have noticed an increase in malware getting past firewalls and spam gateways as the authors of this rubbish become even more sophisticated.  We are encouraging more and more customers to look at using mail scrubbing services who are specialised at removing 99.99% of all malware and spam from your email traffic.  They are better equipped and provide a more robust service than either you or I could afford to put in-place, and it's not expensive.  Talk to your LANtech account manager about how such a service could help you deal with this problem and at the same time greatly reduce your Internet traffic cost.

6. Mobile device security

USB keys, mobile phones, USB disk drives, and even plain MP3 players can be used for storing and stealing organisation data.  More and more devices are emerging that represent a threat to any organisation, whether through accidental or intentional compromise and/or theft of data.

Securing an organisation from such exposure will be of increasing concern in 2009.  Devices such as the ‘Iron Key', a USB key device that provides encryption and secure storage of password and data, will become popular.

Realisation of this significant threat has been alarmingly slow.  Any individual could buy an 8GB USB key for under $50 and within a few minutes have transferred all of your critical business information to that key and walk out with it, without you ever knowing.  Unless you have protection and policies to avoid such a threat being possible, then you are significantly exposed.

7. Hosted services and SAAS applications

2009 will see an increase in SAAS (Software as a Service) applications becoming available.  Many application software vendors are beginning to offer their products with an option to use the application externally hosted based on a monthly usage license model.   Both Microsoft and Google have SAAS services that will be enhanced during 2009.

For some organisations outsourcing their complete computing infrastructure to a hosted service provider such as vOffice (http://www.voffice.net.nz/) will represent a more cost effective and efficient option, allowing the organisation to focus on their core business and freeing up much needed capital.

The trend to offer Software as a Service has definitely been on the increase.  A number of NZ software vendors are moving to such a model and are either looking to host the service themselves or are partnering with hosting companies to provide the service.

Overseas this trend is moving very rapidly indeed.  Microsoft, Yahoo, Google and Sun are all rushing to build enormous data centres around the world in order to address the opportunity of what is being now called ‘Cloud Computing'.  Microsoft is planning to build the world's largest Data centre in Scotland.  Some 250 acres of computer hardware, US$1.6 billions dollars and planned for operation by 2010.  The computing landscape is poised to under go yet another substantial change with the advent of the so called Cloud Computing revolution. 

The time is not that far away when you won't know where your data is being stored or where the application you are running is being served from, and you won't care so long as it provides you with what you and your business needs.

8. Open Source Applications

2008 saw a maturing of open source operating systems like Linux and the emergence of Open Office as competition to Microsoft.  In an economically challenging environment, the lure of virtually ‘free' software will be compelling and we will likely see greater uptake of Open Source products.   There will need to be some further deployment of a number of these products before we are likely to see any serious intrusion into Microsoft's market share, but Open Source is here to stay and will only become stronger.

Open Source applications continue to emerge and mature but are seriously compromised by it's lack of funding for marketing and any support infrastructure beyond just geeky forums.  Consequently commercial take-up has been slow and it may take some time before we see any real intrusion into Microsoft's market dominance. 

9. Managed Services and Outsourced IT Support

Many organisations still have fat Internal IT departments that will need to justify their existence in 2009.  The concept of the SLA (Service Level Agreement) will no longer just apply to external service providers but also to internal department staff (if not already).   Increasing automation and remote monitoring systems (such as LANcare) mean that outsourced IT support will be more cost effective and a more capable option for many organisations.

We have seen a number of organisations considering out-sourcing their IT support and the concept of Managed Services has certainly proved attractive for many businesses.

Significant growth in set price Managed Services is being reported by many service providers, overseas as well.

10. Regulatory Compliance - Information Management and email Archiving

In the U.S.A. complying with government regulations such as Sarbanes-Oxley Act (SOX) and Health Insurance Portability and Accountability Act (HIPAA) has been an expensive and complex task for businesses.   In New Zealand we have the Public Records Act in place since 2005, but that mainly impacts Government departments and agencies.  As yet there is no law is in place requiring that business retain communication records and be subject to audit, but most agree that it is not likely far away.

However, in 2009 we will see greater interest from businesses wanting to put in place methods of records archiving that goes beyond what is required by auditors.  In particular email archiving will be of greater importance.  This is not only in preparation for future compliancy, but also in protection for the organization when it comes to litigation and the ability to present email evidence that is legally acceptable.

In addition to email archiving, organizations are now storing information at an exponential rate.  The challenge of how to manage, store, back-up and easily retrieve information is becoming a daunting task.

Various products and hosted services will emerge that will be able to help organizations in this area but many are still in their infancy.  The challenge is being able to put in place a complete and affordable information management system that is able to address all of these areas.

There is still strong interest in archiving application software and services but the cost is still high and, in the back-drop of the credit crunch, most companies are deferring decisions.   There is also no particular application that is outstanding in this area and there is a lack of clear compliance specifications.  However the need is very real and most organisations will need to have some form of archiving solutions in-place by next year whether due to compliance or simply to address better information management.

11. Solid State Disk drives

The most unreliable component in any computer system comes back to the only moving mechanical part - the disk drive.   They also represent one of the key performance bottle-necks of most systems. 

Solid state disk drives have been in development for some time and are starting to emerge in the smaller notebooks and in some networked storage systems.  A solid state drive has no moving parts but works just like a standard disk drive, but way faster.

To date they have been expensive and had some restrictions associated with how many times you could write to the disk, however the technology in this area is progressing rapidly and in 2009 we will see a great deal more of solid state drives making their way into all areas of IT and at much lower costs.  It will be a few more years before they completely replace the mechanical disks but it will eventually happen.

A standard hard disk can handle about 120 information requests per second (IOs), a solid state drive can provide 120,000.   The cost of the drive however is still prohibitive unless that level of performance is essential.  However they are set to fall late 2009 by as much as 50% or more (news.cnet.com) but the real ‘tipping point' where the cost of these drives will begin to compare favourably for general use will likely not occur for another 12 to 18 months.  The use of these drives in notebooks could well be a driving factor as the power consumption is dramatically less.

12. Back-up / Recovery, Business continuity, Disaster Recovery

I recall seeing a shocking statement in 2008 that 90% of New Zealand SME organisations could not recover from a disaster and would likely go out of business.  Certainly in our experience we have seen plenty of evidence in support of this.  Few businesses even have an adequate IT back-up system never mind any form of Business Continuity or DR plan.

2009 will see a greater reliance on IT by organisations and increasing volumes of information having to be stored, backed-up and retrieved.  Not being able to access such information, even for 24 hours could spell disaster to many organisations.

This also becomes a governance issue.  The directors or governors of any organisation  that fails, due to inadequate Business Continuity and/or Disaster Recovery capability, could be held accountable and liable.

Many organisations will need to examine this area and ensure that they are adequately protected and have some degree of business continuity and DR capability in 2009.  A disaster could be simply a burst water pipe, or the failure of a CBD power feed as was seen in Auckland not so long ago.

The need is still very apparent and events such as the Swine flu outbreak has certainly increased concern in regard to business continuity, but, perhaps due to the current economic climate, many organisations continue to take the risk and not address this critical area of their IT.   The odds are working against most businesses while their dependence on their IT system increase.  Eventually there will be serious casualties.

13. Broadband Infrastructure growth

Promises by the new government to improve broadband services, improvements to the Southern Cross Cable increasing link capacity to the USA and Australia, further unbundling of broadband services and increased competition are all factors that will result in improvements in the broadband infrastructure and cost decreases.  At least that's what we're told.

New Zealand has one of the most expensive broadband services in the western world, given our remoteness, small population and terrain it isn't very surprising, however deregulation and competition should result in decreasing cost and better performance in 2009.

As better and more affordable services become available, this will further impact on how we do business.  Telecommuting (working on-line from home rather than travelling into work) and Teleconferencing (video and/or audio conferencing rather than meeting in person) will become a greater reality in 2009.  With the cost of travel increasing and the ability of our commuting structures struggling, telecommuting and teleconferencing are becoming ever more attractive.  Key to achieving this will be the ability to have access to reliable and cost effective broadband data connectivity.

A broadband connection in NZ is now available for as little as  $19.95/month, but limited to 200MB/month, you can't really call this broadband.  The cost for a reasonable connection speed and a traffic cap of 10GB will still cost around $60/mth at best.  This is still very expensive by international comparisons but the competition is there and the unbundling of broadband will continue to drive prices down.

14. Virtualisation

One of the most bandied about terms to be used in the IT industry in 2008 was ‘virtualisation'.  Everything was being described as "virtual"; virtual disks, virtual servers, virtual workstations, and virtual storage.  However, over the last few years many IT managers have discovered that the reality fell short of the promises made.

However, the lessons have been learnt and the technology has matured with a number of new technology players entering to offer ‘virtualised solutions'.

So what is virtualisation?  In simple terms it is taking a single computer or a single storage box and using virtualisation software, carving up that box so that it looks like multiple computers or multiple storage partitions.  Typically a single computer sits idle 80% of the time.  Virtualisation uses this fact to make more effective use of the resources available in a single box by allowing it to act as if it is multiple computers.

The key area that we will see an increasing take up of virtualisation will be in the computer room of larger organisations, where traditionally there would be racks of computer servers and other equipment.  It is now possible to substantially reduce the space, power requirement and number of boxes, and obtain greater effective use of the equipment through virtualisation.  But even where only 3 or 4 servers are used then there can be advantages in using only 1 or 2 boxes that are ‘virtually' running the 3 or 4 servers.

With virtually (excuse the pun) every new multi-server deployment now being considered, virtualisation is a very real and viable option.   The technology is no longer ‘bleeding edge' and has definitely moved out of the back-room and into production environments.  VMware is still very much the market leader but other players are quickly catching up including Microsoft with Hyper-V and Citrix with ZenServer.

15. Green computing

Most would agree that global warming is a fact and over the last few years we have seen increasing concern about the amount of energy we consume.   Over the last couple of years the amount of power used by computer equipment has become of increasing interest for organisations.  Both the power consumed by the computer equipment and the power needed to cool computer rooms and offices can be considerable, and this soon translates into dollars.  While we all have concerns for the environment, it is the cost that will be a principle driver towards green computing.

Over 2009 we will see increasing focus on the power consumption of computer systems and this will become a factor associated with the total cost of ownership.

The concept of carbon credits and green compliance is not, as yet, a large consideration for many businesses when making IT decisions, but that will gradually change as concerns for power consumption and air conditioning costs begin to become a significant component in the cost of ownership calculation. 

16. Growth of Notebooks and ‘Netbooks'

Global sales of notebooks in the third quarter of ‘08 exceeded desktops for the first time in history.  This is a trend we will see continue and grow in 2009.  According to market watcher iSuppli, 15 million ‘Netbooks' where purchased in 2008 (source:ABI Research).

Netbooks are low cost (most sell for under NZ$700) , compact and light weight  (1-2kg) and compact size, with some easily sliding into a jacket pocket.  They are targeting people that mainly want to simply access the Internet and always have access to email and social networking sites.

Solid state hard drive, GPS, wireless (3G broadband, local wireless LAN and Bluetooth) and touch-screen are all features that are emerging as being built-in to these devices.

At the 2009 Consumer Electronics Show in Las Vegas, Sony the Sony VAIO P Series is slightly more expensive than the typical netbook but it is far more powerful, feature-rich and weighs just 0.6kg (Sony P-Series).

One of the drawbacks is battery life, with most Netbooks only giving 2-3 hours operation, but this is expected to improve as new technology in both batteries and low power processors in embraced.

Sales of the smaller A4 sized ‘mini-notebook' have not been dramatic but are growing rapidly.  They are proving popular particularly with students and travelling executives, and are a cost effective and convenient alternative to the standard notebooks.   The battery life is improving but is still a challenge.  We will continue to see new models emerge this year with new enhanced features.