Disrupting the market with low-priced, high-spec phones
Malaysian organisations to only take ‘baby steps’ towards IoT
RESEARCH firm IDC expects Chinese and Taiwanese-branded devices to increase their share of the smartphone market in Malaysia to 65% by the end of this year, from about 46% last year, thanks in part to their lower prices and inventive marketing campaigns.
Speaking to the media on Jan 10 in Kuala Lumpur where IDC presented its predictions for 2015, its senior research manager for client devices Daniel Pang said that while there are still Malaysians who prefer to own a premium brand-name smartphone, many are feeling the pinch.
He said Chinese and Taiwanese smartphone manufacturers are disrupting the market by quelling the notion that consumers must own a highly-priced, high-spec device in order to own a good smartphone.
“Consumers, for example, used to look down on Chinese brands and paid a premium for high-end brands [like Samsung and Sony],” he said.
“[But today] we’ve come to a point that most of the smartphones in the market are good enough for daily needs, and don’t have to cost over RM2,000 (US$560),” he added.
Pang (pic) said that, for example, high-end smartphones by China-based Meizu, Lenovo and Huawei all retail for less than RM1,300 (US$364), and they are as good as some of the smartphones that cost RM2,000, feature-wise.
“What this means for the market is that smartphones that retail in Malaysia north of RM1,500 (US$420) probably aren’t going to do that well, especially if that name isn’t Apple,” he argued.
However, this does not mean that these Chinese manufacturers would continue slashing prices, as they would still have to make money, so there is a limit to the price war, Pang said.
“But what’s certain is that this would put a lot of pressure on brands such as Samsung, Sony, LG and Microsoft. Will these brands maintain their premium pricing by banking on their brand loyalty?
“I’m sure these vendors will fight to maintain their premium status, but it’s more likely that they would have to lower the prices,” he ventured.
Pang also argued that if any smartphone vendor wants to be successful, it would not only need to be price-competitive and build a device with high specs, but would also need to come up with creative marketing campaigns so that its devices stand out over the rest of the field.
“China’s Xiaomi has shown the way in this respect, and other players would do well to follow the same strategy in order to create buzz around their products,” he said.
IoT not there yet
Meanwhile, IDC reported that while the Internet of Things (IoT) trend picked up somewhat in 2014, actual adoption in a holistic way by companies in Malaysia was still sorely lacking.
Citing IDC’s Asia Pacific C-Suite Barometer 2014, IDC research manager for telecommunications Alfie Amir said that only 7.4% of enterprises in Malaysia are expected to build successful business cases for the IoT and begin implementation this year.
He said IDC does not expect a spike in demand for IoT solutions in 2015, and that it’s likely that organisations across all industries will only be taking “baby steps” towards IoT as they evaluate the offerings and assess the potential returns on investment.
Alfie said the biggest challenge facing the IoT in Malaysia is that there aren’t clear proven business cases on which companies can leverage.
“There are very few use cases today as far as the IoT is concerned,” he pointed out. “Additionally, the IoT ecosystem – a hub that brings all players together – is still lacking.
“There are also skill shortages in cloud computing, cloud security, data connectivity, as well as the general understanding of every industry’s specific requirements,” he added.
Alfie (pic) said IDC believes that whatever IoT implementations there are will be confined to being tactical in nature, and will focus on improving operational efficiency rather than driving competitive differentiation.
Asked what must be done to further spur take-up, he said he expected public sector initiatives spurred on by agencies such as national research organisation Mimos and Malaysia’s ICT custodian Multimedia Development Corporation, as well as those undertaken by multinational companies, should lead the way and develop use cases for the private sector to follow.
“Given that the Malaysian Government is driving various initiatives to increase IoT awareness and adoption, and working to bring together IoT solution providers and industry players, IDC expects the Government will focus primarily on IoT solutions for healthcare, education, and smart cities in 2015,” IDC said in a statement.
IDC’s Predictions is the research firm’s yearly forecast of the major ICT trends that are expected to take place or gain traction in the coming year.
Amongst the other predicted trends forecasted in 2015 for Malaysia by IDC are:
About 25% of chief information officers (CIOs) surveyed by IDC Malaysia will take a step back and focus on infrastructure transformation as a platform to grow. IDC believes that the next generation will be characterised by seeing the role of the CIO and IT organisation as being able to change the business, disrupt the industry, and to create new opportunities.
IDC expects the big data analytics (BDA) market in Malaysia to reach US$36 million in 2015, a 28% increase from the previous year, with a five-year compound annual growth rate (CAGR) of about 30%. By 2018, BDA spending will reach US$80 million and will grow at a much faster rate than the overall IT spending growth rate in Malaysia. [RM1 = US$0.28]
Increasing cyber-attacks will drive demand in managed security services (MSS). Cyber-attacks in the country will not only see a rise, but will be increasingly sophisticated. This trend will drive more enterprises to outsource their security operations to MSS providers instead of building a team of IT security inhouse.
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