I’m not an early adopter.

Early adopters must own the latest devices. They run ahead of the pack. They upgrade devices and software before everyone else.

Early adopters use the latest phones. They buy cars with weird features. They queue up in the wee small hours for iPhones, iPads or games consoles. Back in the day they’d go to midnight store openings to get the newest version of Microsoft Windows a few hours earlier.

Their computers never work because they are awash in beta and alpha versions of software screwing things up.

And some of their kit is, well, unfinished.

Computer makers depend on early adopters. They use them as guinea pigs.

Early adopters first to benefit

Marketing types will tell you early adopters will buy a product first to steal a march over the rest of humanity. They claim they will be the first to reap the benefits of the new product. It will make them more productive or live more enjoyable lives.

This can be true. Yet early adopters often face the trauma of getting unfinished, unpolished products to work. Often before manufacturer support teams have learnt the wrinkles of their new products.

There’s another reason computer makers love early adopters — they pay more for.

New products usually hit the market with a premium price. Once a product matures, the bugs eliminated and competition appears, profit margins are slimmer.

Companies use high-paying early adopters to fund their product development.

Being an early adopter is fine if you enjoy playing with digital toys. If productivity isn’t as important to you as being cool. If you have the time and money to waste making them work.

I don’t. I prefer to let others try things first. Let computer makers and software developers iron out the wrinkles while the product proves its worth. Then I’ll turn up with my money.

In technology the early bird pays the bill.

Gartner says New Zealand technology spending will be $11.8 billion in 2017. That’s up 2.7 percent from 2016. It’s also a lot higher than last year’s forward looking forecast from Gartner. The total spend is forecast to pass $12 billion in 2018.

Communications services is the top technology category in New Zealand. Customers will spend a total of NZ$4.4 billion this year.The category includes consumer fixed and mobile voice and data services, enterprise fixed and mobile voice and data services. It may be the biggest sector, but shows next to no growth.

Gartner expects software to be the star performer over the next year, with IT services also showing respectable growth. Sales of devices and data centre systems will be flat.

Australians spend more however you cut it

New Zealand’s numbers compare with a total IT spend of A$83 billion in Australia, almost eight times the amount spent here. Australia’s communications services sector is around six times the size of New Zealand’s at A$26.8 billion.

Gartner expects both New Zealand and Australia to increase spending in the next year by more than the worldwide 2.4 percent forecast.

IT Spending Forecast Q2 2017

In part the difference between Australia and New Zealand can be put down to population size. Yet there’s more to the numbers than how many people live in each country. New Zealand’s spend amounts to around NZ$2,500 per person, while Australia’s is almost A$3,500.

One possible explaination for some of the difference is that some Australian IT companies wrap New Zealand revenue into local income. And there’s a tendency on the other side of the Tasman to gold-plate projects. Yet you can’t escape from thinking Australians appear more willing to invest in technology.

New Zealand: IT Spending Forecast (Millions of NZ$)

Segment201620172018
Devices    1,659    1,734    1,724
Data Centre Systems        344        342        347
Software    1,363    1,499    1,647
IT Services    3,764    3,840    3,920
Communications Services    4,355    4,383    4,437
 
Grand Total  11,484  11,798  12,074

 

Abstract, Jackson Pollock

Gartner says NZ IT spending will reach NZ$11.4 billion in 2017. That’s up 2.3 percent on last year.

This is less than the expected 2.7 percent rise in global IT spending.

The reason for New Zealand’s underperformance is that nation’s biggest IT spending category is fixed and mobile communications services. It accounts for almost 40 percent of all NZ IT spending.

Gartner says growth in this sector is likely to be flat over the next two years.

In 2016 we spent NZ$4.36 billion on fixed and mobile communications services. Gartner’s projection puts 2017 spending at NZ$4.38 billion. That’s a rise of about 0.6 percent. The estimate for 2018 is NZ$4.43 billion.

Meanwhile spending on software will rise from NZ$1.4 billion last year to NZ$1.5 billion in 2017 and will reach almost NZ$1.7 billion in 2018.

Segment2016 YR2017 YR2018 YR
Devices    1,541    1,572    1,556
Data Center Systems        400        402        398
Software    1,421    1,541    1,674
IT Services    3,442    3,518    3,599
Communications Services    4,355    4,383    4,432
Total  11,159  11,417  11,659
Gartner – all numbers in thousands of NZ dollars

Australia’s largest sector is IT services. Gartner says software will be the fastest growing sector in 2017 for both New Zealand and Australia.

Global spending is set to total US$3.5 trillion in 2017. Gartner says the year was set to see a rebound for the industry. It originally forecast 3 percent growth. However political uncertainty means the analyst company has dialled back its optimism.

Gartner research vice president John-David Lovelock says the uncertainty means there’s a wait-and-see mood with many enterprises forestalling IT investments.

Cloud, blockchain, AI all trending

He identifies the big trends as cloud, blockchain, digital business and artificial intelligence.

The analyst expects worldwide spending on devices, PCs, tablets and phones to stay flat at US$589 billion.

Gartner says a PC replacement cycle, strong pricing and functionality will help drive growth in 2018.

We’ve seen similar optimistic projections before now. Some from Gartner. It’s hard to know where that replacement cycle will come from. Technology sales have been falling for years now. Even if it does kick-in, the industry needs more than replacements to see a fresh wave of growth.

Things are strong in the IT services market. Gartner expects the global market to grow 4.2 percent in 2017. It says this will come from investments in digital business, intelligent automation and services optimisation. The report goes on to warn buyers remain cautious.

White hat hackers

Ethical hackers, a growing band of computer professionals, use their skills to work out of hours on projects benefitting society.

Don Christie, founder and director of Wellington’s largest open source service and cloud computing service provider Catalyst, is happy if developers and other IT professionals working for the firm moonlight as hackers.

Thanks to the media, hacker is a term usually associated with people who do bad things with computers. However, the word has taken on a more positive meaning in technology circles. In that world hacking is the art of taking things apart, then putting them back together in ways that are better or where they do something that was never the original designer’s intent.

Read the full story at the ANZ Bank’s Your World site: Meet the weekend ethical hackers.

Money

Companies large and small are decommissioning information technology infrastructure as they move to cloud computing.

That’s not news. Cloud and as-a-service offerings have been discussed for years. They are the new normal.

Cloud is often cheaper and more efficient than owning and maintaining infrastructure. This is especially true where technology isn’t strategic.

Yet it isn’t always clear which approach has the lowest total cost of ownership because IT TCOs are hard to measure. Few businesses can tell you how much specific self-hosted applications cost to run.

Cloud costs are easier to gauge – you get a bill each month. There is nothing to depreciate.

No depreciation

Few understand the financial and strategic implications of not having large IT investments on balance sheets. Tax laws mean companies depreciate installed systems over several years. Traditional technology is capital expenditure.

Cloud subscriptions are service payments. You can write them off as operating costs.

A switch to the cloud frees capital for investment elsewhere. It also changes how people, especially at the top of businesses, think about technology. The implications of this aren’t yet fully clear, but most likely companies will become more nimble in their thinking.

There will be less sunk cost thinking – that’s where people argue “we’ve paid for this stuff we need to get a return on what we spent” – and more “what technology makes the best sense now” thinking.

This will give business owners more agility – they can better respond to changing conditions. This works just as well when expanding a business as when cutting costs.

Which could mean turbulence. That’s not always a bad thing, change means opportunity, but it can also mean greater business uncertainty and more risk-taking.