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Business News (more headlines) 11-24-2012

Top Five IT Predictions For China In 2013 And Beyond

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Technology and research advisory firm Gartner, Inc. has published its top five IT predictions for China in 2013 and beyond, as China's IT market undergoes major transformation, especially in cloud and mobility. Analysts said that although China's IT market has similarities with the global IT market, it also faces challenges and opportunities that are very specific to the Chinese marketplace.

Enterprise spending on IT in China is forecast to grow from US$117.8 billion in 2013 to reach $172.4 billion in 2016, representing a compound annual growth rate of 8 percent, compared to a global growth rate of 3 percent over the same period, according to Gartner.

"In common with many emerging markets, cloud and mobile initiatives are hot and enterprises are also making progress in adopting virtualization technologies, a key stepping stone in the journey to cloud," said Matthew Cheung, principal research analyst at Gartner. "Without the legacy systems that hamper many western enterprises, Chinese organizations have an opportunity to leapfrog in the adoption of new technologies. However, the current hype around cloud could also result in its failure to live up to market expectation in a few years time. In mobility, China is a market characterized by strong local flavors, especially in the fast growing smartphone and tablet markets."

Gartner's five key IT predictions for China in 2013 are in the markets of virtualization, smartphones, personal cloud, media tablets and public cloud services:

By 2013, Lenovo will become the top smartphone vendor in China.

Lenovo is the world's top PC manufacturer, and the company's mobile phone business has gained real momentum in China.. Its smartphone market share rose from 1.7 percent in 3Q11 to 14.8% in 3Q12, making it now the No. 2 smartphone brand, ahead of Apple (6.9 percent) and behind Samsung (16.7 percent). It is the only local smartphone player that can compete with global top brands in China, thanks to its household brand recognition, nationwide distribution, strong portfolio and reasonable pricing. The brand is positioned at the mid-to-lower end which will drive much of its future growth, and this is where global brands are less competitive. It will also gain share from open markets where its brand and distribution are better established than local competitors. These factors will help Lenovo achieve the top smartphone position in China, although its rise will not be without challenges.

By 2014, at least three personal cloud providers will extend the service to the TV.

Many personal cloud services today offer content access from computing devices that include the PC, mobile phones and tablets. Some device vendors enable content sharing between TV and mobile devices via apps and WiFi connection, but such service is limited to devices of the same brand and doesn't make use of the cloud. Personal cloud services will break such limitation and bring content access and sharing across devices of different brands. Gartner expects at least three providers to extend their services to the TV by 2014. Going forward, providers will look for new areas of differentiation, and TV support will be one of those. This can also enhance the user experience where users can pause on one device and resume from the other. In the future, this can extend beyond media content to allow users to make calls, view emails and respond to text messages from the TV while they are away from computing devices."

By 2016, shipments of media tablets will match shipments of mobile PCs in China

Media tablets are becoming much more affordable in China, and Gartner forecasts that the average price of media tablets in the country will drop from $262 in 2011 to $176 in 2016. This price drop will make media tablets more affordable and suitable personal devices than mobile PCs, and as a result, media tablet shipments will eventually match those of mobile PCs. Gartner predicts that shipments of media tablets will reach 57 million units in China in 2016, nearly matching mobile PCs at 58 million units. The adoption of media tablets is not limited to the consumer market. There is increasing media tablet demand from many different vertical markets such as hospitality, insurance, finance, retail transportation, education and others.

By 2016, 70 percent of x86 enterprise server workloads in China will be virtualized and 30 percent of them will be HVD workloads.

Currently, 60 percent of global x86 enterprise server workloads are virtualized. China is expected to follow a similar pattern and virtualized x86 workloads will grow from around 10 percent today to 70 percent in 2016. Similar to the worldwide trend, the growth of server virtualization in China will be fuelled by data center energy saving, floor space reduction and servers utilization as well as the path to private cloud. Growth of Hosted Virtual Desktop (HVD) workloads will outpace server workloads over the next few years. The growth in server virtualization and HVD market will impose significant opportunities for virtualiztion technology vendors, systems integrators and private cloud service providers, especially for those who have already built a local presence and delivery capabilities in China.

By 2016 at least 70 percent of today's government-funded public cloud service providers in China will be out of the market

The Chinese government's 12th five-year plan listed public cloud computing as a national-level strategic technology and the government has encouraged investment in the last five years by providing direct funding or policy incentives such as tax reductions. Around 10 provincial governments will build 30 large data centers of more than 1,000 square meters each to support companies by offering public cloud services locally.

In the short-term more government-involved public cloud computing service data centers will get online, but many of them will not be able to make their businesses profitable, and they will be forced out of the market - many by being sold to other providers - before they can expand. However, those suppliers who survive will have the opportunity to demonstrate a profitable business model or innovative differentiation. When deciding whether a cloud service provider should benefit from the government incentives, the government should carefully evaluate the cloud providers' service capability and innovation capability and business model.


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