"The IT and telecom industry convergence, consolidation, and realignment of the past two years will continue in full stride in 2006," said Frank Gens, senior vice president of Research at IDC. "A critical new ingredient we'll see is the acceleration of disruptive business models - 'open innovation' in IT product and service development (the open source effect) and online delivery of IT as a service (the Google effect). These disruptive shifts will force most vendors to perform a strategic gut check as they enter the year."

The following are the key themes that IDC predicts will shape the IT industry in 2006:

• Continuing moderate IT growth - 5.5% worldwide, a drop from 6% in 2005 - will create the pressure that drives IT suppliers to think outside the box. Growth-oriented IT industry leaders will be thinking creatively about new product and service offerings, new business models, and new types of industry relationships and communities.


• Geographically, IT industry expansion will be driven by continuing double-digit growth in emerging markets: China, India, Central and Eastern Europe, and the Middle East and Africa.


• The shift to more modular, efficient, and business-responsive IT (what IDC calls "Dynamic IT") drove dozens of mergers and acquisitions in 2005.


• Most of the big market share leaders in IT (e.g., Microsoft, IBM, Oracle, SAP) got that way by keeping tight control over their own product development. The go it alone model of innovation is an endangered species in the IT industry, and incorporating a community-based innovation model (e.g., open source) is quickly becoming an important ingredient for market leadership.


• IT delivery has been shifting from products to services over the past several years. But in 2006, IDC expects this model shift to accelerate. The most obvious evidence of this shift reaching a tipping point will be the announcement in 2006 of next-generation versions of applications delivered as an online service (e.g., Salesforce.com) from one or more of the packaged application leaders (SAP, Microsoft, Oracle).


• The "Google effect" will spur traditional players to hasten their move to disruptive models. In 2006, Google will increase its presence as a disrupter in the information, application, and services segments of the IT industry


• In the consumer space, 2006 will see IPTV get off the ground, but altitude will still be low with only one million telco subscribers (vs. 70 million cable in the U.S.).

IDC's annual Predictions are designed to identify and highlight key trends and pivotal choices facing the IT industry in the year ahead.

Source: YahooPrashanth RaiTag(s):IT, Predications