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Gradual global recovery means Malaysian 2014 IT spend will touch US$21B, Gartner says

AvantiKumar | April 7, 2014
Globally, businesses are shaking off their malaise and returning to spending on IT to support the growth of their business, says Gartner's Richard Gordon.

Richard Gordon, Managing Vice President at Gartner modified 

Photo - Richard Gordon, Managing Vice President at Gartner, Inc.


Malaysia's 2014 IT spend will keep pace with the gradually recovering global economy and hit 7.4 percent growth to reach RM68 billion [US$20.73 billion] while global IT spend is on target to total US$3.8 trillion in 2014, a 3.2 percent increase from 2013 spending, according to Gartner, Inc.

"Globally, businesses are shaking off their malaise and returning to spending on IT to support the growth of their business," said Gartner managing vice president, Richard Gordon, speaking of the analyst firm's latest forecast (April 2014), following its earlier announcement for Malaysia.

"Consumers will be purchasing many new devices in 2014; however, there is a greater substitution toward lower cost and more basic devices than we have seen in prior years," said Gordon.

He said the devices market (including PCs, ultramobiles, mobile phones and tablets) is forecast to return to growth in 2014, with worldwide spending of US$689 billion, a 4.4 percent increase from 2013 (see Table below).

Table 1. Worldwide IT Spending Forecast (Billions of U.S. Dollars) modified

Table - Worldwide IT Spending Forecast (Billions of U.S. Dollars) 2013

 Shift to mid- and low-end devices

"However, in top-line spending, a shift in the product mix continues to be seen in the marketplace," said Gordon. "Demand for highly priced premium phones is slowing, with buyers in mature countries preferring mid-tier premium phones, while those in emerging countries favour low-end Android basic phones."

"In addition, the number of traditional PC users is contracting to a set of fewer, albeit more engaged, users," he said. "In general, consumers are opting to buy premium ultramobiles as notebook replacements and purchasing tablets as additional devices. As market power shifts to the buyer, and key product innovations become ubiquitous, product pricing is becoming the primary differentiator."

 The Nexus of forces

Meanwhile, he said that data centre systems spending is expected to reach US$143 billion in 2014, a 2.3 percent increase from 2013. "In terms of enterprise network equipment trends, cloud and mobility are the biggest demand drivers. Virtualisation and cloud adoption are generating significant market traction for data centre Ethernet switches, and the proliferation of mobile endpoints is continuing to drive significant demand for the wireless LAN equipment market."

Gordon said that the enterprise software market spend is on target to total US$320 billion, a 6.9 percent increase from 2013. "The enterprise software market is the fastest-growing segment in 2014.

"The Nexus of Forces (the convergence of social, mobile, cloud and information) continues to drive growth across key major software markets, such as CRM, database management systems (DBMSs), data integration tools and data quality tools," he said. "In fact, organisational adoption of data management technologies to support the Nexus will cause spending on DBMSs to surpass operating systems, making the former the largest enterprise software market in 2014."

He said IT services should total US$964 billion in 2014, up 4.6 percent from 2013. "IT services buyers are shifting spending from consulting (planning projects) to implementation (doing projects), and we expect steady growth in the IT services market as the economic outlook, and along with it investment sentiment, improves."

In addition, Telecom services spending should grow 1.3 percent in 2014, with spending reaching US$1.655 trillion. "Fixed voice services continue to decline from substitution effects occurring a bit faster than previously anticipated, affecting the balance of wireless-only households in important markets, such as Japan, as well as the migration of enterprise lines due to Session Initiation Protocol (SIP) trunking (the use of voice over IP (VoIP) to facilitate the connection of a private branch exchange (PBX) to the Internet)."

The Gartner Worldwide IT Spending Forecast is an indicator of major technology trends across the hardware, software, IT services and telecom markets.


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