IDC predicts 8.5% CAGR in Malaysia's software market

21 August, 2006

Kuala Lumpur, August 21, 2006 – The Malaysia packaged software market is expected to grow 8.3% year-on-year from US$442.89 million in 2005 to US$479.6 million in 2006, and forecasted to expand at a CAGR of 8.5% from 2006 to 2010. The US$442.89 million revenue in 2005 consists of 61.1% contribution from applications market, 21.5% from application development and deployment software market (AD&D), and 17.4% from system infrastructure software market.

"Major vendors are expanding into new product categories, vertical industries, and customer segments, orchestrating a comprehensive strategy to cultivate fresh leads, cross-selling opportunities, and sustainable ecosystems," observes Elaine Lee, associate analyst, Software Research, IDC Malaysia.

In the local application market, there are a lot more local players emerging that can compete with the global players. These local players have their own competitive advantage in terms of local industry understanding, great support, and better pricing offer. Having said that, some global players opt to work closely with the local players, whereby the global players provide technological support while the local players extend their industry experience.

Organizations are attaching greater importance to establishing a direct link between an IT project or solution and a corresponding business priority. Vendors must ensure that their solution proposals directly address organizational challenges, including adaptability and productivity. With such challenge, no wonder SOA (Service Oriented Architecture) is the hottest topic in the AD&D (Application Development and Deployment Software) market; the industry's effort is to deliver a coherent distributed computing paradigm. Like other countries, the adoption of reusable composite applications within Web services standards based architecture is slowly gaining traction in the local market. This initiative however is progressing in phrases.

Software bundling with hardware is common in the market. For instance, security appliance is gaining preference in the market compared to plain software due to its lower total cost of ownership as well as easy management. With the line between network and security blurring, the products are now often capable in offering both functions. As users begin to worry of proliferating information and the need for data protection, vendors are moving into creating solutions that ensure security and business continuity. As the systems infrastructure software market continues to exhibit the highest growth area, the vendors will ensure that they are competitive. More vendors will make significant acquisitions to extend their technology in the areas like identity and access management, IT governance, network management, virtualization, and application management.

Malaysia Software Market Share by Primary Market, 2005

Source: IDC, 2006

For more information about this research, kindly contact Hazmi Yusof at 603-2169-7522 or hyusof@idc.com, or Stephen Chong at 603-2169-7521 or ckchong@idc.com.

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