Data centers, the cloud and Big Data: three technologies that Baird Equity Research views as momentum-drivers in 2013, as the enterprise sector rebounds from a weak economy and concerns such as the “fiscal cliff.”
According to Baird, competition among IT vendors offering a variety of cloud services will help drive the data center market over the next 12 months. In addition, the firm wrote in a recent report, “We believe data centers will not only become more ‘virtualized’ but will start to be managed with greater centralized automation and intelligence.”
Baird argues that the “software defined data center” will bring some of the most significant changes to IT architectures and revenue models in some time. First, enterprises will build private clouds that deliver IT resources as a service, in a manner similar to public-cloud vendors such as Amazon; meanwhile, desktop software will continue to migrate to the cloud. For the largest enterprise vendors, that means a new cycle of acquisitions as they seek to rapidly strengthen their respective portfolios.
But that doesn’t mean the private data center is going to win. Instead, Baird believes that public cloud offerings—including Software-as-a-Service (SaaS), Infrastructure-as-a-Service (IaaS), and Platform-as-a-Service (PaaS)—will continue to outgrow the on-premises datacenter market. Research firm IDC expects SaaS to grow 22 percent (versus 6 percent growth for the rest of the software market)—which is why, according to Baird, SaaS vendors are seeing acquisitions in the seven- and eight-figure range.
But Baird doesn’t expect to see a decline in technology services firms. Too many clients assess their internal technology strategies on a regular basis for this segment to disappear entirely, at least in the short term.
“Big Data is emerging as a key trend in 2013 given explosive growth in data volumes, and the desire for enterprises to extract useful insights from this data,” Baird added. “Emerging technologies are enabling enterprises to store and analyze structured and unstructured data in large volumes, high variety and/or high velocity.”
Baird believes that Big Data is being segmented into three categories: analysis and storage of unstructured data, as led by tools like Hadoop; high-performance analytics of structured data, by the big players like IBM and Oracle; an in-memory technologies, where flash memory is used to store data and metadata for lightning-fast access.
Baird also identified Windows 8 as a catalyst for PC sales during the second half of 2013; the continued rise of mobile platforms like Android and iOS; and that the growth of connected devices would benefit carriers.