Competitive Intelligence

Technology Sector Recovery Means Half of IT Vendors Will Disappear

Gartner came out this morning at its Tech Investor Summit in New York and said that IT spending is getting better, but that half of the companies in the technology sector today will be gone in two years, as victims of consolidation.

One other factor that will affect buying behavior will be the evaporation of competitive pricing as well, as competition actually diminishes, rather than grows more robust, and a turnover in tech skills is likely to affect millions of workers:

"We are now seeing a true recovery in the making," said Al Lill, Gartner group vice president, in a statement. "There is a key combination of technology advances, architectural changes, market forces and best practices in place to lead a good recovery for IT in the near future and culminating in very strong growth in the longer term." The next two years will see a minimum of strong single-digit growth over this year's levels.

The current trend of consolidation will continue, leaving the IT industry in the hands of a few powerful players in the next two years, Gartner said. These players will regain their pricing power, after a period in which companies have been forced to slash prices to drive sales. In the PC industry, low prices have fuelled a boom in mobile products such as laptops and wireless equipment.

For tech workers, the recovery will mean a tremendous skills shift possibly affecting millions of people, Gartner predicted. The most valuable skills will include broadband, wireless, Linux, content management, data mining, security and business intelligence.

- Arik