Gazing into its crystal ball, analyst International Data Corporation predicts "pockets of opportunity" for the IT industry in an otherwise gloomy outlook this year.

Buyers slashing budgets will spur the growth of emerging technologies such as cloud computing and netbooks bundled with mobile service plans, IDC said today in its annual list of predictions for the year ahead.

And Green IT will be an incidental beneficiary as organisations find smarter ways to do their computing in the data centre, at the desktop and on the road, IDC Pacific's managing director Graeme Muller said.

Held online as a series of podcasts and slideshows, IDC's Directions09 canvassed topics such as virtualisation, distributed computing and channel operations.

The list of 10 predictions was dominated by one thing: cutting costs.

IDC predicted that IT spending was "down but not out", falling to 2.6 per cent this calendar year from 3.7 per cent last year but rising to 5.7 percent next year. It hit 7.7 per cent in 2007, IDC said.

As the private sector vacates the economy, governments will have a stronger hand to play -- in spending and regulation, Muller said.

This was already happening with increased regulation of telecommunications in Australia and New Zealand as they built broadband networks to compete with other countries once the recession lifted. Muller said the trend to regulation, separation and intervention is at the "tip of the iceberg".

"The telco market is at the start of a new era which will, for the time being, be dominated by governments," Muller said.

He said there were tough times but "pockets of opportunity" ahead, especially for the channel, as spending on nascent technologies boomed and shifted from hardware to services -- especially with netbooks, one of the few growing hardware categories. Again, governments will be key players as their spending packages lift overall economic activity, Muller said.

The message for the channel was that margins on hardware will fall -- especially as netbook sales lift at the expense of notebooks driven by flight-travel restrictions, tight budgets and mobile-plan packaging -- and services were bundled with hardware.

"The slowdown is being felt hardest in the PC and peripherals markets as consumer spending declines and businesses extend their product refresh cycles," Muller said. "Whereas the services market, operating on longer contract cycles should have better ongoing revenue streams to tide them over."

Small and mid-market businesses that represent the bulk of Australia's private sector will go to the wall unless they get a handle on their cash flows and returns on investments, IDC said. This will drive them to seek more flexible pricing from their suppliers and those vendors with cash in the bank to support such incentives will "gain a competitive advantage".

And although not all spending was aimed at IT, any government money flushing through the economy from other sources would have a likely "strong impact" on the IT industry, he said.

But even as the state increased spending, it will "press for greater value from suppliers of services", as evidenced by the recent acceptance of the Gershon Report by the Federal Government, Muller said.

"And while these do not mean lower contract prices, they will be expected to substantially increase their service offerings for a similar price."

Read on to page two to see why you'll be buying your staff netbooks in the next refresh.