The technology industry is set to experience fascinating shifts over the coming 12 months – and staying ahead of the curve will, as always, separate the winners from the losers.

OC&C Strategy’s Ewan Parry gets under the skin of CIOs, exploring the opportunities and threats at the forefront of their minds.

The rise of wearable apps

We’ve all heard it said: 2015 is destined to be the year of wearables. While there are already a number of wearable devices on the market, the Apple Watch is set to turn the wearable landscape on its head – and not in the way people might expect. Device innovations are just one part of the story. Even more interesting is the fact that the wearable trend will stimulate development of the next wave of applications – apps which, by necessity, will be fundamentally different from those designed for smart phones.

>See also: The race for complete digitisation

When Apple launched its App Store – one year after the launch of the iPhone – it brought huge, unprecedented innovation to the smartphone market. Now with the launch of the Apple Watch SDK in November 2014, an ever expanding army of innovative and independent developers are preparing a myriad of apps for launch in 2015.

As is the case with regular smartphone apps, many of these offerings will disappear without a trace. A select few, however, will become the hit applications of 2015. Where these winners will come from is yet to be decided.

B2B software applications will migrate towards an App Store model

App stores have been the primary model for consumer application distribution for some time now. What we are beginning to see, however, (and will see more of as the year progresses) is a migration of this trend towards B2B software.

B2B software companies are increasingly developing software and add-on modules to exploit the advantages of the App Store platform. A number of significant moves have given this trend momentum – IBM and Apple’s MobileFirst venture is one sign of the times, but tech giants like Microsoft are also recognising the need to design and distribute software via IoS and Android platforms.

But it’s not just the usual suspects of Apple and Google getting in on the B2B app game. Other players have caught on and are becoming major forces in their own right. Salesforce (Force.com) and the Intuit Marketplace, for example, have developed their own B2B app stores to target smaller businesses – with the Intuit App Centre alone featuring 100s of web-based apps.

We should expect a significant upswing of this trend in 2015, with those B2B software companies which jump on the bandwagon early reaping the rewards.

Major tech M&A

We expect 2015 to witness major M&A activity in the tech space. With rising share prices and high cash generation, the industry is clearly out of recession and M&A moves are on the horizon.

Private equity will remain active across the tech space from development capital through to large LBOs. But we also expect some of the major players to place big bets in M&A this year. Ones to watch include Cisco, IBM, Oracle and of course Google, all expected to invest in higher growth segments of the tech and services landscape.  Apple may also move away from share buyback and look to strategically invest in the emerging Internet of Things.

Tech-enabled services like transaction processing, hosting and data analytics are the hottest prospects on offer – so this is a space to watch.

Tech recruitment will give employees the upper hand

The battle for talent in tech continues. It has become increasingly clear that CIOs are finding it hard to recruit IT professionals with leading cloud skills and capabilities.  According to the IBM Business Tech Trends Study, 40% of organisations surveyed reported moderate-to-major skills gaps across cloud, analytics, mobile and social technologies. Often the individuals with these in-demand skills are shunning corporate employers to work for leading cloud IT organisations or to set up their own companies. Conversely, this is leading to more IT outsourcing, as companies lack the talent to deliver services internally.  The net effect is that IT staff can continue calling the shots.

For CIOs, building a critical mass of in-house IT professionals who can develop cloud services or those that can collaborate effectively with third-party cloud and hosting organisations is an absolute priority for 2015. Savvy CIOs will invest in their own staff, as well as exploiting opportunities to work with third-party cloud organisations to build in-house skills.

The cloud journey has only just begun – how individual CIOs and IT professionals react to it will determine whether it proves to be a blessing or curse for their company.

The death of the traditional tech company

Tech companies used to be relatively easy to define: they delivered hardware, software and IT services or a combination of these. But in 2015, we expect to see the death of the traditional bellwether tech company.

>See also: The intelligent enterprise: how businesses will use cognitive computing

IBM begins its first year as a purely software and services business (following the sale of its server and microelectronics business to Lenovo and Globalfoundries) and HP is in the process of being split in two. IT companies are increasingly investing in an array of tech-enabled services – be they content, information services, data analytics, supply chain transactions, invoicing services or payment engines. The key is that they are all tech-enabled: using technology to add value rather than selling the technology itself.

The next wave of outsourcing (including cloud back-up, cloud archive, shared project drives, information sources and fully hosted email) will drive huge growth in hosting and cloud services. These segments of the market – already growing at a rate of more than 20% each year – will continue to attract heavy investment and large scale M&A. So, in 2015, the ‘technology-only’ company will become a thing of the past.