IDC announces top key trends in Malaysia ICT market in 2004

02 January, 2004

Kuala Lumpur, January 02, 2004 – According to IDC's recently published research highlighting its top key trends for the IT market in Malaysia, IDC expects the market to maintain IT spending momentum of 8% growth over 2003 in 2004. Hardware will remain the largest contributor to total IT spending, weighing in 62.8%, although IDC expects this contribution to fall over the 5 years forecast period.

"As the economy continues to show gradual recovery, IT spending will benefit from improvements in business confidence. There may well be no dramatic return to the peaks of double-digit growth that preceded the downturn, at least for the industry as a whole, but a robust and healthy market will rise from the ashes, driven by innovation and value," said, Huei Min Lee, Research Manager, IDC Malaysia.

IDC's top key trends for the IT Market in Malaysia in 2004 are as follows:
1. Malaysia ICT & Telecom services market tracking a sustainable growth in 2004.

For 2004, IDC expects the market to maintain IT spending momentum of 8% growth over the prior year. Meanwhile, Malaysia's telecom services market (includes fixed network, Internet access and wireless services) is forecasted to grow by 7% between 2003-2004.
2. The Rise Of Business Process Outsourcing (BPO).

In 2004, IDC expects to see larger companies more proactively consider the possibilities of adopting BPO. IDC anticipates corporations will begin to make strategic decisions on applying concepts as outsourcing document delivery to third party providers to other business functions within the organization, such as financial accounting and HR function, to control costs and maximize resources.
3. Unbundling of the local loop.

IDC predicts that the local loop will be unbundled in 2004, hence, enabling second tier service provider to provide telecom services to reach out to households and corporate businesses. This exercise will introduce new revenue streams for incumbent carriers such as Telekom Malaysia as the carrier can opt to wholesale some of their current services such as xDSL to interested 2nd tier providers to replace lost of revenue from direct services. Opening up the local loop would also mean larger revenue streams from interconnect fees.
4. Independent software vendors (ISV) – Emerging Opportunities in new market Segments.

Independent Software Vendors (ISVs) are increasingly valuable to leading software vendors because of their ability to influence the market, extend brand reach and add value to existing solutions. Product-oriented partners are the largest influencers in the market and will remain so in the near future.
5. Let the games begin with Wireless Gaming.

Moving forward with the many advent of wireless technologies, IDC believes that wireless gaming will be a new revenue opportunities for the local players, namely; local content/ applications providers and local wireless carriers. In that sense, IDC anticipates increase in local wireless gaming players' participation and as market confidence continues to build up, we expect wireless gaming market in Malaysia is here to stay and grow.
6. Shift from Hype to Commodity Components.

2004 will be the first year in which - on both the hardware and system software side - virtually all of the leading players will now see standards-based products as the core of their future business, and not just a fast-growing product category. And this is the year in which the major market players will be severely tested in this new context - can they fully commit their organizations to this model, and successfully create differentiation without tall proprietary fences to protect them?
7. Convergence revolution.

2003 saw the launch of many convergence devices in Malaysia from multi-function printers to merge mobile phones, PDAs and even digital cameras. IDC predicts that in the printing market, inkjet multifunction peripherals are expected to grow at a CAGR of 75.7% from 2002 – 2007, while in the smart handheld devices, the growth in adoption of these converged devices is expected to escalate at a CAGR of 91.4% through 2002 - 2007.
8. Wireless LAN Adoption -Consumer & SME Leads while Enterprises Lags.

2004 is set to see an accelerated growth of wireless networking adoption especially in the Small and Medium Enterprises (SME) and home market, largely contributed by continuing price drop of WLAN equipment coupled with the exponential growth of broadband adoption.
9. Making money from Business intelligence (BI).

The business intelligence (BI) software market is forecast to increase to $7.6 million in 2007, at a compound annual growth rate (CAGR) of 7.0% between 2002-2007. In 2004, IDC expects to see this growth to strengthen as the opportunities for BI lay ahead for pure-play, best-of-breed business intelligence (BI) software vendors.
10. MESDAQ Market Doubles its Success in 2004.

The performance of the MESDAQ market depends much on the liquidity in the market that has returned in the second half of 2003, and is likely to continue given the positive interest and review of the MESDAQ stock market. There is a renewed interest in technology companies with the recent successful MESDAQ IPOs. Stocks like AKN has grown 5 times within the last 12 months. Together with a GDP growth for 2004 forecasted at between 5.5-6% by the Government (source: Economic Report, Sept 2003), IDC believes that the MESDAQ market continue to have a successful 2004, Will the MESDAQ reach bubble status? Most likely, but not in 2004, barring unforeseen worldwide circumstances such as seen in the September 11 and other events that will bring about a slowdown in worldwide economy.

For more information about purchasing this research, please contact Hazmi Yusof at +603-2169-7526 or hyusof@idc.com. For press enquiries, please contact Stephen Chong at +603-2169-7521 or ckchong@idc.com.

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