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Yesterday I attended the “Hot Technologies in 2012 Local Briefing” for the financial services industry hosted by Gartner.  The venue was primarily for CIO’s of large financial firms.

They discussed a few interesting trends that I believe are very important for the street.

IT is losing control. 

• IT budgets are being cut or stagnated and being moved outside of the CIO’s control.  According to Gartner, by 2014 25% of the average firms tech budget will be outside of a CIO’s decision.  By 2018 it could be double that.

Mobile will dominate.

• By 2016 there will be 920 million tablets in the market, that’s 1 out of 8 people on the planet.
• By 2014 iOS and Android will have an installed base of more than 50% of operating systems in the world.
• By 2014 only 1 in 4 IT projects will focus on the PC platform.

So where are all of these mobile developers going to come from?  I’m not sure.  Also, where is the IT budget going to come from?  Gartner suggests that the budget will come from outside of IT, perhaps the chief marketing officer and other business groups.

Another question, why is the street continuing to focus on the PC platform and web apps if this is retro technology?

The cloud is huge.

Cloud technology is finally being adopted by the street, forcibly so.  Because of budget constraints on IT departments, many are being forced into the cloud because of the tremendous cost efficiencies.

However, Gartner claims “beware of cloud providers that might not be cloud providers in the future”.  Economies of scale and sinking server/component costs will drive many providers out of this commodity business in the future.

The consumerization of IT.

There is a consistent theme in all of this and it has to do with the continued empowerment of the consumer/employee and the consumerization of IT.

This is a great post from the understatement.  Check out the chart below on the fragmentation of OS’s on Android devices:

This chart represents the manufacturers support of the latest OS for each smartphone device.  And it doesn’t look pretty for Android devices.

So why don’t Android devices get updated? 

According to Michael Degusta, “Obviously a big part of the problem is that Android has to go from Google to the phone manufacturers to the carriers to the devices, whereas iOS just goes from Apple directly to devices.”

“In other words, Apple’s way of getting you to buy a new phone is to make you really happy with your current one, whereas apparently Android phone makers think they can get you to buy a new phone by making you really unhappy with your current one.”

Apple finally realized that the masses of newbie iOS programmers out there, most coming from the Java world, really don’t get it. 

iOS memory management is just too difficult for most of these developers that have never coded in C, C++ or Objective-C, beyond maybe a college introductory course.

According to Apple:

Automatic Reference Counting (ARC) for Objective-C makes memory management the job of the compiler. By enabling ARC with the new Apple compiler, you will never need to type retain or release again, dramatically simplifying the development process, while reducing crashes and memory leaks.

They chose not to call it a garbage collector for good reason. It’s not a garbage collector.  It’s a compile time, not a run-time, driven memory management model.  Meaning the memory management is built into the binary code.

Apple was really forced to implement this feature.  Apple must compete with Java on Android and this is a critical feature. 

Let’s analyze the space for a moment.  Apple has sold over 25 million iPads, has over 90,000 iPad apps and another 300,000 iPhone apps that will run on the iPad.  They invented this market and totally dominate it at this time.

HP today introduced its competitor, the TouchPad, at the same price as the iPad ($499) with roughly 300 apps in the store. 

So I’m a consumer walking into Best Buy, which also sells iPads.  Why would I buy a TouchPad? 

So what should HP do?  I say HP needs to do something radical, like give it away for free.

HP spent $1.2 billion just to acquire WebOS.  They probably spent another billion or more on product development and marketing so far.  So why not give away the hardware to gain significant market share?  Let’s say up to $4 billion worth of hardware.

If you think $4 billion is a lot of money for HP, think again.   HP has over $12 billion in cash on hand.  And over the last year, HP has lost over $50 billion in market capitalization.  During that same period, the iPad has added nearly $100 billion in market capitalization to Apple.

If we do the math, and I’m guessing on the high side of what it costs HP to produce a TouchPad, they can give away 10 million TouchPads for $4 billion.   Let’s say the cost is significant at $400 per device.  $400 x 10 million = $4 billion.

And if HP can give away 10 million TouchPads by the end of the year, and it is predicted that Apple will sell another 20 million by the end of year giving them a total of 45 million iPads, this gives HP a 22% market share (10 million TouchPads/ 45 million iPads).  I’m ignoring other competitors at the moment because they are essentially insignificant at this time.

So within 6 months, HP becomes a major player in the space.  Developers have no choice but to take a hard look at producing apps for the platform and HP in turn gains more market share.

The tablet market is key for HP according to analysts.  “The TouchPad has to succeed for HP to get its mojo back,” said Peter Goldmacher, an analyst at Cowen & Co.  “If they can’t do it in on e of the potentially highest growth markets, it will cast doubt on their ability to do it at all”.

And what if they don’t give it away?  Let’s say they get lucky and sell 1 million units by the end of the year. 1 million TouchPads divided by 45 million iPads (1,000,000 / 45,000,000) = 2% market share.  With 2%, no one really cares that much and I think this 2% happens if they’re lucky.

HP needs a radical strategy to fight this battle.

This is going to be huge.  Moving your credit cards to your mobile phone means that my real-life wallet will shrink by about 90%.

Google announced a deal today (Wall Street Journal) with MasterCard and Citigroup for it’s Android platform.  Verifone, the manufacturer of most of the retail credit card terminals is also invovled.

The tech used is called Near Field Communication (NFC).  Basically, wave your phone in front of the credit card terminal, and payment can be made.  Google has an advertising angle here, displaying ads to the customer at checkout.

If you think about it, they could easily add coupons, location-based deals, etc.

Apple’s upcoming iPhone 5 is also rumored to have an NFC chip installed as well.