With 2008 almost here, it's a good time to stop and think about the really big picture for next year. What matters most in tech? What are the megatrends that might affect your job or career? What cool toys will you get for Christmas? Well, maybe not that last one. But let's tackle the other two, with some help from a new Morgan Stanley report based on the firm's recent Internet and Technology conferences. Actually, this is something they do every year - a mega, 50-page tome summarizing all the trends they can think of, chock full of miscellaneous fascinating statistics, albeit often provided by vendors (such as Cisco).
The caveat here is that Morgan Stanley has always been among the most rah-rah investment banks when it comes to Internet technology, and this same high profile report was the one they used to fan the flames of the first Internet bubble. So it's provocative, but we'll take it with a grain of salt.
The headline here is about growth, driven by consumers, emerging markets, and video content. Consumers are now the top users of semiconductors, for example, having surpassed enterprises and the government. Consumer IP traffic is set to overtake enterprise traffic in 2008 (overall IP traffic is doubling every two years and will continue to do so). And consumer devices, particularly cell phones and iPod-type hardware, are driving huge growth in distributed storage capacity.
More impressive growth stats: U.S. IT spending as a percentage of corporate capital expenditures is back up to 50 percent and climbing, having dipped down into the 40 percent range from 2002 to 2005. Google's year-over-year search query growth is 70 percent, and YouTube's annual growth rate is 185 percent. In fact, YouTube served 20 Billion minutes of video in August (that's three minutes for every soul on the planet, folks). Wikipedia's growing 92 percent per year, and Facebook, 348 percent.
Interestingly, most of the action is taking place outside the U.S., according to Morgan Stanley. China, India, and Latin America account for the vast bulk of PC, Internet, and mobile device growth (and it's not just higher growth rates than the U.S. and Europe; their absolute numbers are bigger too). And the report notes that non U.S. markets are leading in usage penetration in many tech categories (eCommerce in Germany, online gaming in China, broadband in South Korea, mobile payments in Japan, online advertising in the U.K, and social networking in Brazil, to name a few).
Furthermore, Morgan Stanley sees some reasons to get excited on the enterprise side. Datacenter growth is robust (the report notes that Google's capital expenditures are running about 20 percent of revenue, or US$4.5 billion this year). And there's strong momentum for software as a service (broadly defined), led by companies such as Amazon, Demandtec, Intuit, Netsuite, Omniture, Paypal, Skype, Salesforce, and Taleo.
But wait, there's more. There are new growth opportunities everywhere you turn: Internet-enabled devices are proliferating (Wii, iPhone, Xbox Live), and innovation in wireless is accelerating (only 10 percent of the world's 3.2 billion mobile subscribers were 3G this year, but that will double by 2009). eCommerce is still only 4 percent of all shopping in the U.S., and online ads are only 10 percent of the total advertising pie.
OK, OK, it's gonna be a happy growth-story Christmas! Morgan Stanley has vanquished the Grinch and all is good in tech land. Maybe save this column and re-read it whenever you're feeling blue. Sing yourself a happy tune. Whistle while you work. Or just crank up that new iPod and enjoy the fruits of the best growth chapter in tech history!
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