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That was the message from IDC Senior Vice President & Chief Analyst Frank Gens<\/a> as he kicked off the research firm’s Directions 2012<\/a> conference in Boston this morning. Gens, who has tracked the computer industry since the days when mainframes ruled the earth, outlined a dramatically new economic structure that will emerge as economies of scale take hold.<\/p>\n \u201cVolume is going way, way up and price is going way, way down,\u201d he said of the new software market. \u201cIf [technology companies are] going to drive large-enough volumes to support the revenue levels they’re used to, they’re going to have to drive the number of customers way up. You’ll need millions of customers in order to compete.\u201d<\/p>\n Gens outlined some striking changes in the platforms and architectures that underlie what he called the \u201cthird platform\u201d of computing after mainframe and client\/server. Among them:<\/p>\n But the most startling changes Gens outlined concerned the software applications market, where downloadable free and low-cost apps are redefining the economics of the business. IDC forecasts a five-fold increase in annual apps downloads to 137 billion by 2016. Only about 18% of those apps will be paid for, and average prices will fall from $1.59 today to 82 cents. \u201cThat’s spooky stuff when you consider that PC apps average about $25\u201d and that that market isn’t growing, Gens said.<\/p>\n Technology companies will need to overhaul their business models to accommodate these shifts. In order to attract the thousands of new customers they’dd need to recruit each day, vendors will have to become experts at cultivating communities and working with partners and even competitors. In other words, word of mouth marketing is the only viable promotional model.<\/p>\n Will Microsoft be a player in mobile platforms? It may be, but Redmond has a lot of work today, Gens said. A recent IDC survey asked developers which platforms they were \u201cvery interested\u201d in targeting. Apple IOS for the iPhone came in first at 90%, followed closely by Google’s Android for smart phones. HTML 5 was a strong third. Microsoft’s Windows Phone 7 was a weak fourth at under 40%. Can Microsoft compete? \u201cWe should know in the next 12 to 18 months,\u201d Gens said.<\/p><\/blockquote>\n Tech firms will also need to serve a wider variety of vertical markets because price deflation won’t permit the luxury of focusing. Fortunately, IDC has identified more than 40 new specialty industries made possible by platform shift, including medical assistant online<\/a>, social mobile commerce and smart buildings.<\/p>\n And if these pressures weren’t intense enough, don’t forget overseas competition. Gens said the business models that support high-volume, small-transaction markets are being honed right now by Indian, Chinese and Russian companies that have worked in that environment for years. US firms, with their high costs and margins, are going to struggle to adapt to a leaner and more competitive way of doing business.<\/p>\n This is one in a series of posts sponsored\u00a0by\u00a0IBM Midsize Business<\/a>\u00a0<\/em>that explore people and technologies that enable midsize companies to innovate. In some cases, the topics are requested by IBM; however, the words and opinions are entirely my own.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" The global IT industry is in the middle of an epic platform shift and the rules for survival in a market built on mobility, big data analytics, social business and cloud computing will be very different than those that applied … Continue reading \n
![\"Frank](\"https:\/\/p.twimg.com\/AnZmBAqCIAA90DI.jpg\" "\\"Frank")
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