IDC says growth rate in Malaysia's 2004 packaaged software market exceeds forecast

23 June, 2005

Kuala Lumpur, June 23, 2005 – IDC's latest study Malaysia Packaged Software, 2005-2009 Forecast and Analysis and 2004 Review (Doc#MY324100M) reveals that the market grew by 7.8% from 2003 to 2004, reaching US$390.3 million in revenue. The growth rate was higher than IDC previously predicted, demonstrating growing awareness of end users on the synergy provided by adding software to their already existing hardware. With the strengthening of the economy, the private sector took the lead in the adoption of IT while the public sector is increasingly realizing the benefits of IT thus spurring demand for various IT solutions.

"Looking forward, IDC expects Malaysia's packaged software market to increase at an aggregate compound annual growth rate (CAGR) of 8.2% from 2005 to 2009, reaching revenue of US$577.7

million by 2009," said Jun-Fwu Chin, Senior Analyst, Software Research, IDC Malaysia. “Software vendors are increasingly working closely with each other to build solutions to complex problems that span an individual company's core capability and to develop application ecosystems and alliances."

The favorable economy outlook is expected to stimulate strong growth for the local IT market. Since IT investment is directly dependent on the business prospects of companies rather than the overall economic climate, vendors will find it critical to gauge what users believe their companies' business prospects are. Overall, the majority of Malaysian enterprises are expected to increase their spending on packaged software within the next six months.

The systems infrastructure software market is expected to be the fastest-growing area, especially the security and systems software segments. In terms of market inhibitors, industry restructuring, price competition, and a change in software delivery models (e.g., from standalone to embedded) will continue to be major issues. Piracy problems particularly among SMEs will still remain major barriers for the maturity of the software market. However, the situation has changed significantly in the past years with the government's anti-piracy efforts becoming more effective.

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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Chee-Kian Chong
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