Kuala Lumpur, 30 January 2008 – IDC believes that in 2008, disruptive technologies will continue to drive the ICT market in Malaysia, and end users will become the driving force in changing the way ICT vendors conduct their business. Hence, understanding the disruptive changes of how end users are demanding for products and services will enable these vendors to gain market dominance.
"The ICT industry in Malaysia will be forced to be ultra competitive in 2008, with a lower growth rate forecasted, due to increasing competition among businesses. This will create more concentrated segmentations which will drive the market in 2008, " said Linus Lai, Director of Research and Consulting", IDC Malaysia.
The following are IDC's top 10 predictions for the Malaysia ICT market for 2008.
1. IT Spending Will No Longer Show a Double-Digit Growth in 2008
IDC predicts that IT spending will grow between 6% to 8% in 2008, compared to a 10.6% growth in 2007, based on IDC's November 2007 Worldwide Black Book. This growth will be driven by spending on hardware surpassing the US$3 billion mark, exhibiting a 4 to 6% growth, while IT services will most likely hover around the 9 to 11% range in 2008. Packaged software will increase between 8% and 10%.
2. Malaysia Telecommunications Services Spending Growth Will Hit 3.6%
Malaysia’s telecommunication services spending in 2008 is expected to reach
US$5,704.6 million, an annual growth of 3.6%. Total fixed services is expected to grow 4.7%, thanks to fixed-data services. Similarly, the total wireless services segment is expected to grow 3.0% in 2008, driven mostly by the wireless data services.
3. Mobile Number Portability Will Have High Anticipation, Minimal Impact
In 2008, mobile subscribers will be able to switch service providers while retaining their current mobile numbers. Operators will intensify their marketing activities to increase customer loyalty and to launch more customer acquisition programs. However, IDC believes that the implementation of mobile number portability will be significantly more hyped than initially anticipated. Based on IDC's recent Mobile Churn and Loyalty Study 2007, only 11.3% of the country's mobile services subscribers will be impacted by the implementation of mobile number portability.
4. Metro Ethernet for Business Users Will Jump 200%
Since its launch to corporate customers in Malaysia two years ago, Metro-E has picked up rapidly and is poised to become the next-generation access technology. More and more enterprise clients have subscribed to it or are undergoing the implementation process. Home users too are starting to crave for bigger bandwidth than what ADSL or IP VPN is currently offering. It is expected that the targeted home users will be those living in luxury condominiums within the Kuala Lumpur center. In 2008, IDC expects Metro Ethernet revenue to jump more than 200% where business users will be the main contributor at 98% of the total revenue.
5. Corporate Social Responsibility Will Accelerate IT Spending on Better Governance
The market opportunities for corporate social responsibility and the ICT industry are brighter than ever with increased awareness, initiatives, and support from all parties. IDC predicts that corporate social responsibility and the ICT industry will drive one another to new heights in the coming year, creating a strong foundation for IT spending in order to improve corporate governance. 2008 will see the seeds of this corporate social responsibility evolution planted, which will open the doors for greater initiatives and possibilities for the ICT industry in the coming years.
6. Web 2.0 Will Influence Enterprise Collaboration
IDC believes that enterprises will start accepting Web 2.0 with a focus on collaboration, customer analytics, and targeted smart search applications. New user-data mining technologies, search/recommendation engines, and social networks will be perceived as part of business marketing tools. Furthermore, some corporations are starting to look into Web 2.0 collaborations, such as wikis, to gather information for projects that call for interdepartmental collaboration. This can be realized through blogs where enterprises facilitate knowledge sharing within the organization. IDC expects more online services and media content to be utilized in the business environment, contributing to a 15% growth in content applications software in 2008.
7. Consolidations and Convergence Will Radically Alter the Business Intelligence Market
In 2008, consolidation and convergence in the BI market is expected to exert some downward pressure on price. However, IDC expects the overall BI market in Malaysia to continue growing positively to exceed US$14 million in 2008 at a compound annual growth rate (CAGR) of 14.6% from 2006 to 2011. Some of the key growth drivers are increased focus on compliance and corporate governance issues, escalating levels of competition, and healthy levels of application deployments.
8. Global Systems Integrators Will Loosen Their Grip on Services Market
The Malaysia IT services market has long been characterized by strong competition between global and local SIs, with the global players taking a larger share of the market. However, as local SIs increase in efficiency, global SIs will find them to be tough competitors and see their market dominance slowly eroding.
9. WiMAX Will Hardly Make a Dent in the Wired Broadband Market
WiMAX services are expected to start in central Kuala Lumpur and business areas in Petaling Jaya and Subang Jaya, and eventually extend into new areas like Cyberjaya. However, the availability of WiMAX customer premises equipment (CPE) will be limited, and the consumers' propensity to use WiMAX services is questionable. IDC believes that the price of WiMAX CPE will be high, due to economies of scale, and will pose a significant barrier to adoption. (please confirm that price will be high due to economies of scale) Hence, in 2008, IDC predicts that WiMAX services will primarily be used as a backhaul service, while last mile to the users will continue to utilize existing last-mile technologies such as WiFi, xDSL, or Ethernet. WiMAX end-user services will see limited take-up primarily due to the high cost of CPE, as well as the steep technology adoption curve.
10. Printing Needs and Strategies Will be Redefined — New Printing Generation
IDC expects HCP vendors who are serious about creating new opportunities for their MFP penetration in the commercial market in the long term, to start investing in understanding local users’ workflow processes in 2008. Such creation of workflow processes by verticals will be the key differentiation strategy for those vendors who are already gaining experience and credibility, and building successful case studies.