IT Spending in Malaysia will reach RM64b in 2018

In Malaysia, spending on technology products and services is forecast to grow 5.8 percent to reach MYR 64.4 billion in 2018 (see Table 1). Meanwhile, worldwide IT spending is projected to total $3.7 trillion in 2018, an increase of 6.2 percent from 2017, according to the latest forecast by Gartner.

“Although global IT spending is forecast to grow 6.2 percent this year, the declining U.S. dollar has caused currency tailwinds, which are the main reason for this strong growth,” said John-David Lovelock, research vice president at Gartner. “This is the highest annual growth rate that Gartner has forecast since 2007 and would be a sign of a new cycle of IT growth. However, spending on IT around the world is growing at expected levels and is in line with expected global economic growth. Through 2018 and 2019, the U.S. dollar is expected to trend stronger while enduring tremendous volatility due to the uncertain political environment, the North American Free Trade Agreement renegotiation and the potential for trade wars.”

Enterprise software spending is forecast to experience the highest growth in 2018 with an 11.1 percent increase (see Table 2). Barring unexpected disruption, the software industry is expected to continue capitalizing on the evolution of digital business. Application software spending is expected to continue to rise through 2019, and infrastructure software will also continue to grow, bolstered by modernization initiatives.

Table 1. Spending on IT by Technology Segment, Malaysia, 2017-19 (Millions of MYR) 

Segment 2017 YR 2018 YR 2019 YR
Devices   10,560   11,580   11,894
Data Center Systems     2,251     2,329     2,357
Software     4,664     5,172     5,754
IT Services   11,418   12,138   12,856
Communications Services   31,969   33,189   34,168
Grand Total   60,863   64,407   67,029

Source: Gartner (April 2018)

Table 2. Worldwide IT Spending Forecast (Billions of U.S. Dollars)

  2017

Spending

2017

Growth (%)

2018

Spending

2018

Growth (%)

2019 Spending 2019 Growth (%)
Data Center Systems 181 6.3 188 3.7 190 1.1
Enterprise Software 352 8.8 391 11.1 424 8.4
Devices 663 5.1 706 6.6 715 1.3
IT Services 933 4.4 1,003 7.4 1,048 4.6
Communications Services 1,392 1.3 1,452 4.3 1,468 1.1
Overall IT 3,521 3.8 3,740 6.2 3,846 2.8

Source: Gartner (April 2018)

Even with a strong end to 2017, worldwide spending on data centre systems is forecast to grow 3.7 percent in 2018, down from 6.3 percent growth in 2017. The longer-term outlook continues to have challenges, particularly for the storage segment. The strength at the end of 2017 was primarily driven by the component shortage for memory components, and prices have increased at a greater rate than previously expected. Whereas previously, component shortages were expected to ease into 2018, the shortages are now expected to continue throughout the year with the supply not expected to ease until the end of the year.

Worldwide spending for devices — PCs, tablets and mobile phones — is forecast to grow in 2018, reaching $706 billion, an increase of 6.6 percent from 2017. “The device market continues to see dual dynamics. Some users are holding back from buying, and those that are buying are doing so, on average, at higher price points,” said Mr. Lovelock. “As a result, end-user spending will increase faster than units through 2022. However, total end-user spending and unit shipments are expected to be lower compared with previous forecasts, as demand for ultramobile premium devices, ultramobile utility devices and basic phones is expected to be slow.”

Gartner’s IT spending forecast methodology relies heavily on rigorous analysis of sales by thousands of vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.

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