KUALA LUMPUR, JANUARY 28, 2010-In 2010, the Malaysian information and communications technology (ICT) industry will undergo a fundamental transformation as well as growth, according to analyst firm IDC.
IDC ASEAN research manager for software research, Roger Ling, said that as part of the company's annual Top 10 Predictions for the Malaysian ICT industry, positive growth is expected in 2010 to cross the US$6 billion mark and grow 6.5 per cent year-on-year. "The Malaysian telecommunications industry will also rebound strongly, exhibiting a growth of 4.4 per cent over 2009, reaching a total of US$6.7 billion for the year," he said.
"In terms of market movement, IDC foresees the impact of the global economic crisis in 2009 to drive new synergies and dynamics in the local market, bringing fundamental transformation and growth to the industry in 2010," said Ling. "The crisis has not only altered the ICT spending patterns but also the business behaviour, resulting in a shift in the business landscape, ecosystem, and strategies, which will continue to evolve in the coming year."
"The overall ecosystem of the Malaysian ICT market is taking on new shape, and both enterprises as well as vendors will need to evolve to thrive and prevail in this 'new economy'," said Ling. "Expect themes like mergers and acquisitions, convergence, and advance go-to-market strategies to shape the coming year."
Ling said the top 10 key predictions that would shape the Malaysian ICT industry in 2010 included recovery.
"Looking back, IDC expects IT spending for 2009 to close at US$5.64 billion, representing a YoY [year-on-year] decline of -1.3 per cent from 2008," he said. "In 2010, there are several key drivers contributing to the recovery and growth in the country's IT spending of 6.5 per cent, mainly with the strong growth in the broad hardware category...This return will greatly offset the total IT spending as its decline was pivotal to the overall decline in 2009.
"Factors such as the government's commitment to raise the level of broadband penetration and its education plan to distribute 100,000 mini-notebooks among local university students are pivotal drivers. Adding to that, the 2010 budget, which has targeted efforts to boost broad-base industries such as education, agriculture, and manufacturing is also expected to have an indirect but critical impact on ICT spending in 2010," said Ling, adding that while IT spending is not anticipated to return immediately to spending patterns like those before the global financial crisis, the recovery and growth process is expected to build up from 2010.
"The second prediction was that telecommunications spending would rebound strongly in 2010. Driven by key factors leading to growth in the telecommunications industry include expected growth from the wireless markets, especially in wireless voice and wireless data, accelerated migration towards mobile services, strong emerging trend of mobile broadband services, as well as higher penetration of smartphone devices," he said.
"The third prediction is that pricing pressure will support the growth of smartphones," said Ling. "For 2010, IDC is predicting that the total smartphone shipments will hit 1.8 million units growing by 19.8 per cent. IDC foresees this steady double-digit growth as a result of intense competition among mobile phone vendors. IDC predicts that the historical trend of declining average selling prices to further support the growth in adoption of smartphones."
Ling said that other predictions included the increased adoption of security-as-a-service, a transformational change in business applications. "[Last year] 2009 saw an unprecedented YoY decline for the applications market that traditionally sees not only a strong YoY growth but contributes to a large chunk of the packaged software market. Looking back at 2009, an underlying agenda emerges, business applications needed to reach a strategic inflection point to survive and thrive. With bits and pieces of vendor strategies emerging through the cracks of mergers and acquisitions [M&A] and new go-to-market activities, IDC predicts that in 2010 there will be a strategic inflection point as seen in a transformational change in business applications."
"Essentially, IDC is predicting that the more silo view and definition of today's business applications will evolve throughout 2010 to incorporate functionally, which reflects the way organisations are conducting business," he said.
Ling said telecommunications service providers (SPs) would face a year of significant change. "This prediction stems from two key assumptions. First, IDC believes telecommunications SPs will expand their roles by diversifying into the IT services business as well as face the possibility of competitive forces leading to an M&A phase in the industry."
Changing business landscape
Ling said that the seventh prediction was that the changing business landscape would impact partner programmes. "A key impact of the global financial crisis, as seen in 2009, was the strategic decision taken by selected IT vendors to reduce global headcount. With the changes set in stone, IDC predicts that vendors will have increased dependency on partner ecosystem."
"IDC believes that the 'new economy' will drive new dynamics which can only be addressed if vendors break the current mould of partner programs. Growing trends like cloud computing/services will add new dynamics moving forward," he said.
Cloud computing would gather momentum, according to Ling. "The results of the 2009 Continuum Survey not only indicates growing awareness and acceptance of cloud computing/service but is also a precursor of what can be expected in the coming year. As awareness slowly translates to adoption, we expect fundamental changes with regards to the expectation of the cloud. In 2010, cloud computing/services will evolve to address the fundamental growth inhibitors. As such, service-level agreement (SLA) and performance guarantees will take centre stage."
"The ninth prediction concerns mobility: both HSPA [High Speed Packet Access] and WiMAX [Worldwide Interoperability for Microwave Access] subscriber adoption rates would grow by end of year 2010," he said. "HSPA broadband subscription in Malaysia is anticipated to reach 1.5 million users, a 71.5 per cent growth rate compared with that in the year 2009; while WiMAX subscribers will hit 137,000 users. The main driver for the strong mobile broadband adoption in Malaysia for year 2010 will be from the tertiary students group, sales representatives group, and residents of new townships."
"Finally, IDC is anticipating the Android mobile phone market share to increase significantly in year 2010 due to positive consumer response toward the Android operating system (OS)," said Ling. "In addition, several global mobile phone vendors have announced that they will incorporate the Android OS into their 2010 mobile devices road map."
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