iWeek kicks off the year with a look back at 2007 and a look forward at what`s expected in the ICT sector in 2008.
There can be no doubt that 2007 was a year of change for the ICT industry, both worldwide and locally, unlike any other period during its short lifetime. The raw numbers only tell a small portion of the story, since the technology-weighted Nasdaq index is up only about 10% since the beginning of the year; whereas the JSE All Share Index has grown by over 20%.
From an international perspective, there were four major trends dominating 2007. These are:
* The continued role of the various private equity companies buying into major IT companies/groups * The consolidation of the business intelligence and IT services markets The acceleration of convergence within the telecommunications sector manifested through many of the telecommunications players buying IT services companies * The acquisition spree that many of the larger ICT players have embarked upon
In a similar way the local market has also seen a number of key trends dominating the sector during the year. These have been:
* The consolidation of the telecommunications sector * The listing of numerous ICT companies on both the main board of the JSE and on the AltX * The BEE investment acceleration, despite the lack of a `sign-off` ICT Charter * The establishment of a local presence by the major international research companies * The rationalisation of the anomaly listings in the Development Capital and Venture Capital sectors of the JSE
In addition, there has been an unprecedented activity elsewhere on the continent with local companies pushing northwards and many key local executives taking on African or MEA roles. The Gulf-based telecommunications companies and those in Europe have also been vying for extended influence on the continent, a phenomenon that will continue to accelerate over the coming months. However, we have yet to see the emergence of any major IT companies outside of South African borders.
Within the context of the above and without being too specific, the following is my list of the most significant happenings of the year:
* The private equity buy-outs of Avaya and 3Com * Acer acquiring Gateway and Packard Bell * The growing influence of the Taiwanese, especially from a hardware perspective * The emerging fight between Google and Microsoft * Microsoft succumbing to the European Union in the anti-trust fight that has been dragging on for several years * The ruling against SCO regarding ownership of the UNIX copyright, a move that may spell the formal demise of the former which are now in Chapter 11
* The acquisition spree undertaken by Datatec and its various subsidiaries such as Logicalis and Westcon * The continued growth of both MTN and Vodacom * The expected consolidation of the Altron group, with the BTG deal already approved and a new and different offer for Altech expected to follow shortly * The bizarre outcome of the Competition Tribunal ruling regarding Telkom and BCX that is the antithesis of similar events elsewhere across the globe * The BEE deal of HP
TSUNAMIS OF CHANGE
But what about the future? What will shape the local ICT sector, and the rest of the business environment, over the next few years? iWeek asked two futurists.
Overriding social factors will shape every aspect of our future, including business and technological development, says Thomas Jankovich, Deloitte Consulting`s head of innovation strategy and FutureWorld guru.
These factors include succession battles, political uncertainty and an increasingly discontented youth, rising energy costs and resource scarcity, as well as the growing influence of Chinese business and labour practices on the continent.
Perhaps one of the most crucial local issues to navigate, he says, will be the impending credit crunch emanating from the global Sub-Prime disaster and our national culture of credit. Jankovich is uncertain about the country`s ability to deal with a credit crisis. "This is a country that ran out of fizz for our fizzy drinks," he jokes.
MOTHER OF INVENTION
Technological development will be shaped by the social needs left in the wake of these "tsunamis of change", he predicts. Rocketing energy prices will force innovation in this area, for instance, he says.
But for 2008 and the local ICT sector, Jankovich believes the telecoms industry will continue with the drastic changes that have already begun. "The groundswell of the anti-Telkom revolution will gain speed," he tells iWeek, adding that the cancellation of the proposed Vodafone-MTN-Telkom deal places SA at something of a crossroads.
From here, he expects more players to enter crucial areas of the market, like Vodacom and MTN`s fibre infrastructure plans. Costs will continue to drop. It will be a big year for broadband, he says.
PEERING FURTHER AHEAD
"In the next year, we`re likely to see a continued development in communication and entertainment technologies, and convergence between the two," says Dr Graeme Codrington, consulting futurist with TomorrowToday.biz.
Various entertainment technologies will continue to cross over into mainstream uses, he adds. "At a conference in Stockholm in September, for example, two pulmonologists proposed that doctors get rid of their stethoscopes in favour of iPods."
Codrington says the next five to ten years should see major advances in bionics (artificial body parts implanted into human beings), rapid advancements in understanding the genetic codes embedded in DNA - leading to new medicines and designer medicines, nanotechnology, voice recognition software, and space tourism.
"There will be major advances in medical and wellness areas, as the world`s largest, richest generation, the Baby Boomers, are heading into a phase of life when those types of products will be very valuable - so we should also see major advances in tools to help us live."
As life expectancy increases, we will have we will have five, even six, living generations interacting with each other in society, he suggests. Four different generations will be in the workplace, as the retirement age is steadily increased and anti-ageism legislation allows people to work longer. This is a dynamic no business can ignore.
Technology allows today`s young people to connect with people they want to connect with, regardless of where they are, rather than the past ways of only seeing people who`re at your school or in your village.
"This is one of the biggest changes in human interaction in recent years. It has already impacted us, with the rise of multinational companies and global brands. It will continue to influence us, with everything from social networking to mobile communications."
With this in mind, he says the next few years will see a focus on developing trust ("ensuring you are who you say you are"), managing interactions and online and digital security, predicts Codrington.
Suddenly everyone wants to lay cables on the African ocean floor. The 200 million people in southern and eastern parts of the continent may soon be getting abundant bandwidth at prices they can afford.
Seacom has started construction of its east coast cable, the East African Submarine Cable System (Eassy) looks as though it may finally get off the ground, and the government`s new Broadband Infraco plans to lay one cable to Brazil and another to Europe.
The network operators are also keen to get into the act. Vodacom has acknowledged that it is in talks with government about laying a west coast cable, but says it will not do this on its own. Rival MTN has indicated that it would be happy to join in an undersea cable venture.
MTN SA CEO Tim Lowry says: "MTN will happily join discussions with the government and competitors to investigate the possibility of a joint venture in building undersea cables. If there are projects we can work together on, MTN is happy to engage the relevant partners."
Government muddled the process, when Department of Communications DG Lyndall Shope-Mafole and Communications Minister Ivy Matsepe-Casaburri started talking about cable ownership criteria.
Seacom stole the march by starting its marine survey in June, long before it had wrapped up its financing and shareholding, which was completed in November.
"We have managed to do in 18 months what Eassy has been trying to do for seven years," says Andile Ngcaba, chairman of Convergence Partners, a private equity firm that has a 12.5% stake in Seacom. "Our financing arrangements are far more flexible and this allows us to sell capacity to whomever needs and when they need it."
Gartner analyst Will Hahn believes that SA and Africa can support quite a few of these planned projects.
"In South Africa, the new cable projects are moving forward steadily and Gartner`s original position that two or even all three could succeed (and be useful) still stands. SA may be the most bandwidth-constrained of all emerging markets, compared to its enterprise demand, and this will be a key (though not the only) factor in bringing the national network up to speed," Hahn says.
For every new feature the IT age comes up with, there is a downside. In many cases this means security, and experts agree that Web 2.0 applications such as social networking sites will bring their own particular set of problems.]
McAfee security strategist Toralv Dirro says the personal information freely displayed on social networking sites can, and is, being used by criminals to target attacks by helping them work out passwords that allows them to target bank accounts and other financial transactions.
The big problem with Web 2.0 on the security front is that it breaks down the traditional distinction between local and wide area networks as the world becomes one huge network.
"As those traditional barriers break down, it is becoming increasingly difficult to monitor who is on your network and what they are doing, and, almost more importantly, are they compliant with policy," Brett Myroff, MD of local Sophos distributor NetXactics, says.
Gartner security analyst Les Stevens says there is a greater use of personal devices on corporate networks, users are demanding more relaxed corporate security controls, and they`re using more Web 2.0 applications for social interaction on their personal devices.
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