Malaysia to record APAC’s highest IT spend growth in 2016: Gartner

• IT spending outlook is positive in Malaysia, forecast to grow 7.6%
• Worldwide IT spending to grow a measly 0.6% to reach US$3.54 trillion

 
INFORMATION Technology (IT) spending in Malaysia is forecast to reach almost RM69 billion (about US$16 billion at current rates), up 7.6% over 2015, the highest growth rate in Asia Pacific, well above the average 4.5% for the region, according to Gartner Inc.
 
Comparatively, worldwide IT spending is forecast to total US$3.54 trillion in 2016, just a 0.6% increase over 2015 spending of US$3.52 trillion, the research and analyst firm said in a statement.
 
2015 saw the largest US dollar drop in IT spending since Gartner began tracking IT spending. US$216 billion less was spent on IT in 2015 than in 2014 and 2014 spending levels won’t be surpassed until 2019.
 
“The rising US dollar is the villain behind 2015 results,” said John-David Lovelock, research vice president at Gartner.
 
“US multinationals’ revenue faced currency headwinds in 2015. However, in 2016 those headwinds go away and they can expect an additional 5% growth,” he said.
 
The devices market (PCs, ultramobiles, mobile phones, tablets and printers) is forecast to decline 1.9% in 2016.
 
The combination of economic conditions preventing countries such as Russia, Japan and Brazil from returning to stronger growth, together with a shift in phone spending in emerging markets to lower-cost phones, is overlaid with weak tablet adoption in regions where there was an expectation of growth.
 
Ultramobile premium devices are expected to drive the PC market forward with the move to Windows 10 and Intel Skylake-based PCs.
 
Gartner has slightly reduced the speed of adoption over the forecast period, as buying in Eurasia, Japan, and the Middle East and North Africa moves away from purchasing these relatively more expensive devices in the short term, but expect them to revert back to buying in 2017 as the economic environment stabilises.
 
Data centre systems spending is projected to reach US$75 billion in 2016, a 3% increase from 2015.
 
The server market is the segment that has seen the largest change since the previous quarter’s forecast. The server market has seen stronger-than-expected demand from the hyperscale sector, which has lasted longer than expected.
 
Typically, this segment has spikey demand which lasts for a couple of quarters before moderating. Demand in this segment is expected to continue to be strong through 2016, Gartner said.
 
The worsening economic environment in emerging markets has had little effect on the global enterprise software spending forecast for 2016, with IT spending on pace to total US$326 billion, a 5.3% increase from 2015.
 
However, key countries in emerging markets, particularly Brazil and Russia, face escalating political and economic challenges. Organisations in those regions must balance cost cutting with growth opportunities during times of economic concern, Gartner said.
 
Spending in the IT services market is expected to return to growth in 2016, following a decline of 4.5% in 2015. IT services spending is projected to reach US$940 billion in 2016, up 3.1% from 2015.
 
This is due to accelerating momentum in cloud infrastructure adoption and buyer acceptance of the cloud model, according to Gartner.
 
Telecom services spending is projected to decline 1.2% in 2016, with spending reaching US$1,454 trillion.

The segment will be impacted by the abolition of roaming charges in the European Union and parts of North America. While this will increase mobile voice and data traffic, it will not be enough to counter the corresponding loss of revenue from lost roaming charges and premiums.
 

Gartner's IT spending forecast methodology relies heavily on analysis of sales by thousands of vendors across the entire range of IT products and services. It uses primary research techniques, complemented by secondary research sources, to build a database of market size data on which to base its forecast.
 
The most recent IT spending forecast research is available here.
 
Related Stories:
 
Malaysia’s IT spending to grow 10% in 2014, outpacing APAC: Gartner
 
AsiaPac PC shipments down 1.5% in Q4 2015: Gartner
 
ICT industry in Malaysia to grow 12-14% in 2016: Pikom
 
 
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