Malaysia: PC Market Outlook, 2003

Transcription

1 Malaysia: PC Market Outlook, 2003 Research Brief Abstract: Solid growth is set to continue in the Malaysian PC market in Vendors should align closely with the government, resellers should work closely with the vendors, and end users should consider TCO. By Erica Gadjuli and Martin Gilliland Recommendations Through 2003, vendors should concentrate on education-related projects, government projects, Y2K replacements, small and midsize business (SMB) growth, wireless technology, mobile PCs and financing deals. Vendors should start identifying end-user segments that will benefit from recent technology upgrades (for example, Centrino, ) to target the right Y2K replacement market. Vendors and resellers must hit price points to compete in a buyer's market and demonstrate value, while end users must not neglect the importance of return on investment (ROI) and total cost of ownership (TCO) in purchasing decisions. Vendors must work closely with the government and fully understand their requirements in a year in which ample government spending on IT is aimed at helping stimulate and educate the economy. End users should consider moving to a four-year PC life cycle and plan to make their PCs last four years. Vendors should develop bundles that match the needs of specific segments in conjunction with their resellers. End users (professional and private) should evaluate relevant new technologies; if upgrading provides only a minimal gain, consider investing elsewhere. End users should shop around for aggressive financing and service/support offerings from resellers and vendors. Publication Date:8 April 2003

2 2 Malaysia: PC Market Outlook, 2003 Introduction The PC market in Malaysia has been strong in recent years, with a 31 percent compound annual growth rate (CAGR) from 1998 through This growth is expected to continue in 2003, albeit at a more leisurely 20 percent year-over-year rate. Mobile PC sales are expected to grow significantly, but they comprise only 26 percent of the total PC market. Deskbased PC growth has had the most significant effect on shipments in Malaysia (see "Asia/Pacific: PC and Workstation Marketplace Report, 4Q02" [HWCP-WW-MS-0263] for more details). Although Malaysia's growth potential is strong, it is still important that vendors and resellers target the strong areas of growth that they are capable of servicing. End users need to make sense of all that is going on during this period of localized growth. Other markets around the world and some in the region are not in the same growth stages as Malaysia, which means that offerings, especially from multinational vendors (MNVs), may not always match the local conditions. With extensive contact and feedback from vendors, end users and other market watchers, Gartner Dataquest has compiled the following list of the top three demand drivers for the professional and private markets in Malaysia for The professional market includes the government, education, large enterprise and SMB markets. The private market includes the home and small office/home office (SOHO) markets in which purchasing PC costs have not been written off against a company's accounts. These lists are by no means comprehensive. They cover, however, what Gartner Dataquest considers to be the most influential factors in the PC market for Various niche markets may have differing views of the coming 12 months, but these issues will significantly affect the majority of the PC market through Demand Drivers Professional Market The following are demand drivers in Malaysia's professional market: Education-related projects Government projects that started in 2002 and are expected to take five years to complete that are aimed at computerizing the school network in both rural and urban areas of Malaysia are expected to be strong demand drivers for mobile PCs, desktop PCs and some IA-32 servers Gartner, Inc. and/or its Affiliates. All Rights Reserved. 8 April 2003

3 Gartner Dataquest Perspective Election-related IT spending With Dr. Mahathir Mohamad expected to step down as prime minister after 23 years in power, this year's elections are likely to be the largest and most important in recent memory. IT spending for election purposes including mobile use to cover rural areas is expected to significantly boost government IT budgets in Economic growth To maintain its target of 5 percent economic growth 2003, while the real effects of the war in Iraq are not yet known, the Malaysian government will extend its stimulus package that gives priority to infrastructure and small-to-midsize development projects. Private Market The following are demand drivers in Malaysia's private market: Education The government's focus on computerization in schools is expected to drive home purchases, particularly desktops. Wireless The low cost of set up and subscription for a wireless home broadband network and a trial to be run in the golden triangle business district of Kuala Lumpur are expected to stimulate strong demand for wireless-capable PCs through Sophisticated home users Increasing interest in digital devices, such as video cameras, cameras and MP3 players, is boosting the need for more powerful home PCs. Online gamers and broadband and wireless needs are also pushing this demand. The Malaysian PC market has recently experienced some of the strongest growth of all hardware markets in all Asia/Pacific, with 2002 being the weakest year in the last four with 16 percent year-over-year volume growth. Growth in 2001 was 53 percent over the previous year. The growth is forecast to continue in 2003, with 20 percent year-over-year growth in a year in which the total Asia/Pacific PC market is forecast to grow only 9 percent (see "Asia/Pacific: PC and Workstation Marketplace Report, 4Q02" [HWCP-WW-MS-0263] for more details). This growth is not expected to be spread equally across all segments. The professional market expected to grow 28 percent, while the private market is forecast to grow only 9 percent. Government Stimulus An era in Malaysian politics is expected to end in 2003, with Mahathir set to retire in October. His replacement has not been named, but in this oneparty democracy, the most likely candidate appears to be Deputy Prime Minister Abdullah Badawi. Part of Mahathir's strengths have been the economic and social reform that he and his party have brought to Malaysia over the past 20 years and which are on course to continue beyond Gartner, Inc. and/or its Affiliates. All Rights Reserved. 8 April 2003

4 4 Malaysia: PC Market Outlook, 2003 Mahathir is adamant that Malaysia should be considered a first-world country in his lifetime and, as such, has set about modernizing much of Malaysia's social, political and economic backbone. Part of this modernization is the push for computerization in the home, schools and government. The government has been trying to encourage Malaysians to buy PCs for the home for several years with some success. More government projects to computerize schools are expected in The government has had little success encouraging Malaysians to buy PCs for the home through its One Home One Computer concept. The ability to use one's Employment Provident Fund (EPF) to purchase a PC for the home was introduced more than a year ago. Unfortunately, the program was forced to end mid-2002, because the scheme was easily abused, and people were withdrawing money for uses other than those stipulated by the government. This concept is being replaced by a longer-term view designed to get people accustomed to using computers in their schools, then offering subsidized purchasing programs for home PCs. This project is well under way, with the Ministry of Education (MOE) purchasing up to 50,000 mobile PCs for mathematics and science teachers nationwide. Various other projects that will significantly advance computerization of the nation's educational system are in the tender (bidding) process or are nearing execution. These projects are open for both local vendors and MNVs, but price always ranks high in importance. Vendors must understand the specific needs of each tender and ensure they have the best product for the tender and the best price possible for that product. The Malaysian government does understand the concept of TCO, but it has tight budgets that are reviewed annually, so a five-year TCO reduction plan is not always an easy message to sell. The MOE and other government departments must look beyond the initial purchase price and consider how to save money through the life of the PC. For the time being, government budgets are not so tight in Malaysia, because the government is trying to stimulate the economy. Consideration should be given to the medium term to help reduce the TCO of a PC. Strong Home Market The need for computer skills is also expected to boost demand for PCs at home, so families can help their children get ahead. MNVs and resellers must work together to develop bundles that will appeal to the various types of home PC buyers. Some home PC buyers will be first-timers and need only a Celeron PC with limited hard disk drive (HDD) and memory and a modem. These people do not need Ethernet, because they are unlikely to want to connect to broadband with this first PC. A low-end printer and installation services may also be included Gartner, Inc. and/or its Affiliates. All Rights Reserved. 8 April 2003

5 Other home PC buyers may be buying a second PC for the home or updatingapctheyhavehadforsometime.theyusethepcformore than just Internet surfing and and will be looking for more features. They will probably be looking for the midrange Pentium 4 processors with a midrange inkjet printer and Ethernet as an option. Other home PC buyers will want a PC with all the bells and whistles. This includes the latest Pentium 4 processor, high-end graphics and sound, large HDDs for their digital peripherals (cameras, MP3 players and so forth) and lots of memory. Many of these will also be looking for flat-panel monitors and good photo printers or multifunction printers. Becausevendorsareunlikelytobeabletooffereverythingenduserswant, they need to work with their resellers to make these bundles as attractive as possible. On top of this, the MNVs will have to create these bundles at very aggressive price points, because the white-box market in Malaysia is quite strong. Approximately 32 percent of deskbased PCs sold in Malaysia in 2003 are expected to be from white-box vendors. End users should understand what they need before they buy. Many PCs have significantly more features than most users will ever need. This is true for both the private and professional markets. TCO vs. Purchase Price At the same time, end users should look for extras they may not have previously considered, such as free installation, free shipping, image management, image loading and even asset management services. These can be provided by either the vendor or the reseller, but all can save considerable cost upfront. Most organizations in Malaysia will complain of limited budgets in 2003, which affects their ability to pay more upfront to reduce TCO charges over the life of a PC. For those that really cannot afford to manage their TCO properly, looking for these extra products and services is the bare minimum. End users must consider white-box vendors carefully to make sure they have a minimum standard in place before thinking too much about the purchase price. Many white-box vendors will offer only a three-month warranty, which is of dubious value even in the best of times. Other minimum offerings to look for include industry standard components, branded motherboards, USB2.0 and an assurance that no components are refurbished or reused from other PCs. This is something that the MNVs and resellers should pay close attention to. MNVs have an opportunity to capture some of the 32 percent share held by the white-box vendors Gartner, Inc. and/or its Affiliates. All Rights Reserved. 8 April 2003

6 6 Malaysia: PC Market Outlook, 2003 Providing basic PCs, without too many extras that help reduce TCO, at very aggressive price points, is the key to this market segment. This can be done by stripping PCs down to the basics and providing resellers a deepvolume discount without having a named end user. Vendors must be careful to monitor any channel conflict when offering such programs. Ensuring that the channels know exactly to whom who they can sell these machines (and to whom they cannot) is vitally important. Named accounts with special bid pricing must be declared offlimits. Many opportunities exist in Malaysia in 2003 for PC vendors and resellers. Value is of primary importance to end users this year, and the vendors and resellers must pay attention to what end users place value on. End users must shop around for what they need and want. There is considerable growth opportunity for vendors this year, so there may not be as many bargains in Malaysia as in other markets. Key Issue What market forces are affecting computing platform shipments and revenue now and in the future? This document has been published to the following Marketplace codes: HARD-WW-DP-0465 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2003 Gartner, Inc. and/or its Affiliates. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice