Predictions 2013 - Make or Break

One of the oft-repeated comments from those taking part in the 2012 Olympics was that they had trained for many years but just a few days in August would be ‘make or break’ for their careers.

In 2000, the tech world changed. It set out on a new path. The trends are well known to TechMarketView subscribers – the ‘maturing’ of the sector which meant that growth slumped to 1xGDP or lower, the move from on-premise to cloud, the advent of mobility and its ‘new’ devices like smartphones and tablets, the move to BYOT, the advent of offshoring which brought a whole list of new top-ranked players, the peaking of public sector IT spend with its serious consequences for the main players.

In the wider economy, the UK and most of the developed world experienced an economic crisis which threatened the banks, the Eurozone and any hope of a return to growth ‘as we have known it’ for the medium term.

None of these points are new. None of them should come as any surprise.

But we see 2013 as a watershed year. Perhaps THE most significant year for our industry and its players for a decade or so. 2013 is the year when all these now well-established trends finally reach their Year of Reckoning.

2013 will be THE Make or Break Year.

Let me give you some specific examples:

• As the world moves away from the desktop to mobile, Windows 8 has to work for Microsoft otherwise it will have a long decline into obscurity. It’s pretty vital for Nokia’s very survival too. We’d put the odds, at best, at 50:50.

• 2013 will be a Make or Break for RIM too as the Blackberry 10 has to revitalise their fortunes otherwise I see them ceasing to be an independent company.

• Surprising as you might find this, I think Apple faces a Make or Break year too. In smartphones and tablets, they face huge competition. Their lead is been eroded. Apple has to launch a game-changing new product genre – the most likely being iTV. If they pull it off, Apple will soar. If it flops (or even is ‘average’) Apple’s golden days will be over.

• And then there are companies like Google, Facebook, Twitter etal ALL of which have got to finally prove that they know how to monetise mobile. Markets have given them the ‘benefit of the doubt’ so far but will be unforgiving if evidence isn’t finally forthcoming.

• 2013 will be the year when BYOT goes mainstream. In the space of 24 months we have gone from ‘Why?” to “Why not?”. Don’t know of an end user who is now not implementing a BYOT policy of some kind. The effect on the main suppliers is huge with HP, Dell, Microsoft having the most to lose.

• Indeed, in many other ways too, 2013 will be Make or Break for HP as they have to ‘get a grip’ on strategy and execution. The current shambles – made even more acute by the recent Autonomy debacle - cannot continue otherwise this 70 year proud company will also lose its independence. And quite rightly too as so much of their pain is self-inflicted from the highest board level.

• Cloud is now mainstream too. But SaaS suppliers, almost to a man, are still loss-making. 2013 must be the year when they demonstrate (or not) that you can make profits from the model using acceptable accounting principles.

• Almost since their inception, and certainly over the last decade, the offshore players have seen unrelenting exceptional growth propelling them to Top Ten rankings in most markets. All that has changed with growth rates plummeting (although they are still higher than the indigenous players) 2013 is likely to be a testing year for them. How will they cope in a low growth environment?

• Many of the main suppliers to the Public Sector tell us that they are reaching ‘breaking point’ in their relationship with Francis Maude and the Cabinet Office. We hope that 2013 will be a year of ‘Making up’ – rather than ‘Breaking up’ - in the crucial relationship between the main suppliers and HMGovt. If not, the consequences for BOTH ‘sides’ are dire.

• On a wider scale, 2013 will finally be ‘make or break’ for the Eurozone. On top of that the UK might finally ‘decide to decide’ whether it is ‘in or out’ of EU by announcing a referendum post the 2015 General Election. Given public opinion, the result of that referendum is currently a foregone conclusion. 2013 will also be ‘Make or Break’ for the UK economy. Are we at last to see sustained growth return? Or is this current ‘no growth’ set to be the norm for many years to come?

Since 2005, we have had a “Diversity of Performance’ theme running. In all my 40+ years in the UK ICT sector I have never seen such a dichotomy between the performance of the top and lowest quartiles – be it companies or sectors. If anything, this dichotomy is growing. Just as an example, although NASDAQ is up a healthy 15% in the last 12 months, the Top Quartile of stocks on NASDAQ rose by a massive 57%. The bottom quartile declined by 23%. I have never recorded such a wide dichotomy in my long ‘career’. Just like a car can run for a while even though its battery is not charging, the same applies to companies. Indeed, there has been much comment on the rise of ‘zombie’ companies in the UK. Time is fast running out. 2013 will be the ‘Year of Reckoning’ for many of these under performing companies and we see a sharp increase in company failures and ‘rescues at garage sale prices’. If you also subscribe to the maxim ‘To be reborn, first you have to die’, that is no bad thing.

If we could concentrate our efforts on the top quartile of high achievers and let the failures fail, maybe 2013 will be seen as a year when our industry and our country really moves to a higher gear.

Footnote – Everyday this week 2013 ‘Make or Break’ predictions will be published for all of TechMarketView’s streams – PublicSectorViews, InfraStructureViews, BusinessProcessViews and ESASViews. Watch out for them or, better still, treat yourself to a TechMarketView subscription for Christmas and have access to the full versions in 2013.

Posted by Richard Holway at '12:29'