Gartner: Consolidation the key theme in 2003
- Reduce text size Decrease text size
- Increase text size Increase text size
- Print article Print
- Jump to comments Comment
- Share this article Share
- Email article to a friend Email
Gartner has said that wave of consolidation across the computer industry will continue into 2003, leaving the market looking dramatically different to how it does today.
5 November 2002 On the same day that services groups Logica and CMG announced a £510 million (€800m) merger, analyst group Gartner has said that the wave of consolidation across the computer industry will continue into 2003.
The merger and acquisition activity will be so rampant that by 2004, the computer industry will look radically different from how it started the millennium, according to Gartner.
The reason for this can be gleaned from a recent Gartner CIO survey. Almost half the respondents believed that growth in IT spending in 2003 will be low or negative. As a result, too many technology companies are chasing too little money, said Gartner research director Steve Prentice. This means that continued, and in some sectors accelerated, levels of consolidation are inevitable.
Worst hit will be the software industry, according to Gartner's forecasts. By the end of 2004, half of the current top 50 software vendors will have disappeared, said Gartner software analyst Betsy Burton.
These companies will either end up being acquired or will go out of business. The software 'powerhouses' such as SAP, Oracle and Microsoft will continue to gain market share at the expense of smaller, niche vendors, added Burton.
In hardware, a continued slump in spending will force most of the major vendors to clamp down their cost of sales to about 10% of total revenues. Brian Gammage, a hardware analyst at Gartner, also said that two or three of the major PC vendors will come together in 2003 to form a 'global aggregate vendor' that will provide a common set of products on a global basis.
As the market becomes even more commoditised, he added, channel-dependent vendors will offer customers value-added services in a bid to steal market share away from direct sales pioneer Dell.
Finally, in IT services, organisations can expect to witness further consolidation, particularly at the high end. More deals on the scale of IBM's acquisition of PwC Consulting earlier in 2002 are likely during 2003, said IT services analyst Roger Cox, as the market polarises between end-to-end suppliers of IT services, outsourcing and consultancy and smaller, more specialist providers.
Gartner also made some bold predictions regarding the future of mobile and fixed-line telecoms over the next 12 months. For example, the company forecasts that only three mobile network operators will survive in each European country. In addition, it said that three pan-European suppliers will dominate the market.
