What makes Gartner think 2017 is a 'rebound year' for Malaysia's IT spending?

Gartner's John-David Lovelock on IT spending expectations for this year.

By AvantiKumar
Jan. 16, 2017

Software-predictions (CSO Online)

Image (CSO) - ICT predictions


 According to analyst firm Gartner, several major emerging technology trends have converged to push IT spending higher for Malaysia in the coming year.

Gartner's research vice-president John-David Lovelock (pic below) said Malaysia IT spending is forecast to reach RM70.2 (US$15.73) billion in 2017, an increase of 7.3 percent over 2016.

This, compares favourably to Worldwide IT spending, which is projected to total US$3.5 trillion in 2017, a 2.7 percent increase from 2016. This global growth rate is down from earlier projections of 3 percent, said Lovelock.
Gartner's positive outlook for Malaysia is also in line with national ICT industry association PIKOM's recently-announced expectations.

John-David Lovelock, Research Vice President, Gartner

"2017 was actually poised to be a rebound year in IT spending globally," he added. "Some major trends have converged, including cloud, blockchain, digital business and artificial intelligence."

"Normally, this would have pushed IT spending much higher than 2.7 percent growth," said Lovelock. "However, some of the political uncertainty in global markets has fostered a wait-and-see approach causing many enterprises to forestall IT investments."

Opportunities arising

He said Gartner's Worldwide IT Spending Forecast takes into account major technology trends across the hardware, software, IT services and telecom markets.

"The range of spending growth from the high to low is much larger in 2017 than in past years. Normally, the economic environment causes some level of division, however, in 2017 this is compounded by the increased levels of uncertainty," said Lovelock.

 "The result of that uncertainty is a division between individuals and corporations that will spend more - due to opportunities arising - and those that will retract or pause IT spending," he said.
"For example, aggressive build-out of cloud computing platforms by companies such as Microsoft, Google and Amazon is pushing the global server forecast to reach 5.6 percent growth in 2017," said Lovelock. "This was revised up 3 percent from last quarter's forecast and is sufficient growth to overcome the expected 3 percent decline in external controller-based storage and allow the data centre systems segment to grow 2.6 percent in 2017."

Some findings

Worldwide devices spending (PCs, tablets, ultramobiles and mobile phones) is projected to remain flat in 2017 at US$589 billion.

"A replacement cycle in the PC market and strong pricing and functionality of premium ultramobiles will help drive growth in 2018," said Lovelock.  Emerging markets will drive the replacement cycle for mobile phones as smartphones in these markets are used as a main computing device and replaced more regularly than in mature markets."

In addition, the worldwide IT services market is forecast to grow 4.2 percent in 2017. "Buyer investments in digital business, intelligent automation, and services optimisation and innovation continue to drive growth in the market, but buyer caution, fuelled by broad economic challenges, remains a counter-balance to faster growth."

The first version of this article was published on Computerworld Malaysia on 16 January 2017.