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Accelerating use of disruptive technologies posing increased
threat to incumbent tech companies, says RBC Capital Markets
SAN FRANCISCO, August 9, 2007 — Corporate early
adopters of technology, whose buying decisions often predict
trends in broader business and consumer markets, are increasingly
looking to purchase "disruptive technologies," especially
in the software, hardware, wireless, networking and information
technology services sectors, which could threaten incumbent
technology vendors. The growing traction of disruptive technologies
is one of the key findings from a global, industry-wide survey
of early adopters released today by RBC Capital Markets at
its annual North American Technology Conference in San Francisco.
Disruptive technology is an innovation that disrupts or overturns
existing market conditions, making an existing technology
less important or even obsolete. Examples include "on-demand"
software and open-source technology. Many times disruptive
technologies emerge by targeting a small subset of the market,
then having the technology catch on to the broader market.
"Early adopters have a track record of identifying trends
three to six months in advance; although these disruptive
technologies are at their early stages of adoption, signs
are emerging that they have the potential to impact incumbent
vendors, with strong implications for investors," said
Marc Harris, Director of U.S. Equity Research for RBC Capital
Markets.
The survey found that a potentially threatening sign for
traditional software vendors is an increased willingness by
companies to adopt "on-demand" software in place
of "traditional" software: 26 per cent of respondents
said they have no major concerns about Software-as-a-Service
(SaaS) adoption and 24 per cent said they will consider deploying
SaaS in the future.
Despite the inroads made by pure-play vendors, larger software
vendors who have consolidated the market could pressure pure-play
incumbents in several sectors. One in four (26 per cent) respondents
plans to increase spending on either Oracle or SAP software
over the next 90 days compared to 7 per cent for pure-play
software companies.
The survey also found that, contrary to conventional beliefs
regarding offshore outsourcing, 36 per cent of respondents
prefer captive (on-site) vs. outsourced operations for global
IT service delivery. Twenty-six per cent prefer multinational
service providers, while just 11 per cent preferred offshore-only
providers. "Price" was cited as the biggest obstacle
for both insourcing and outsourcing decisions, followed by
security concerns (20 per cent).
In terms of networking equipment, the wireless revolution
continues as companies seeking to connect their employees
increasingly turn to Wireless Local Area Networks (WLAN).
More than half (57 per cent) of respondents say their company
has already installed a WLAN, with better connectivity, simplicity
and convenience cited as the chief reasons. Security is the
main concern of those who have resisted wireless.
"Corporate IT executives today are increasingly open
to buying new systems in what is a new technology landscape
- one with aggressive, fast-moving companies that are quick
to translate the latest technology advances into usable products,"
Harris said. "We will continue to track the acceleration
of these disruptive trends and uncover what other emerging
technologies have made an impact."
Other survey findings include:
- Open-source technology is beginning to replace server
software, with one-fifth saying their company's use of open-source
technology has replaced existing server software and an
additional 17 per cent saying it has filled a technology
gap.
- While more than 20 per cent of companies are not yet currently
running server virtualization software (i.e. VMWare, Xen,
or Microsoft Virtual Server), this number is expected to
drop to 5 per cent within five years.
- Voice over Internet Protocol (VoIP) increasingly will
be incorporated into networks as nearly one-third of respondents'
companies (31 per cent) already have implemented VoIP systems.
An additional 10 per cent say their company plans to do
so in the future.
- Eighteen per cent of respondents expect an increase in
their company's purchases of keyboard-based portable devices
(e.g. BlackBerry, Motorola Q) over the next three months,
while 10 per cent expect an increase in touch screen-based
devices (e.g. iPhone, HTC Touch).
- Purchases of Windows-based desktops and laptops are expected
to outpace those of Apple products during the next three
months by margins of three to one.
To conduct the survey, RBC Capital Markets exclusively partnered
with a proprietary network panel of 11,000 leading-edge technologists
at 7,000 companies and collected a random representative demographic
sample of 800 responses. The survey was conducted online during
July 2007. Respondents were from companies of all sizes -
from smaller firms with less than 10 employees (27 per cent)
up to corporations with over 1,000 employees (38 per cent)
- and included senior and mid-level management and IT/engineering
managers.
About RBC Capital Markets
RBC Capital Markets is the corporate and investment banking
arm of RBC and is active globally in debt origination, sales
and trading, foreign exchange, infrastructure finance, structured
products, metals and mining and energy. Its North American
equity underwriting, sales, trading and research business
leads the Canadian market and supports a significant and growing
franchise in the U.S. middle market. Bloomberg ranks the firm
as one of the Top 20 investment banks globally.
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For further information or full survey results, please
contact:
Kevin Foster, RBC Capital Markets, (212) 428-6902, kevin.foster@rbccm.com
Loretta Healy, The Hubbell Group, (781) 878-8882, lhealy@hubbellgroup.com
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