The GCC mobile phone market started 2017 off on a positive note, according to the latest figures announced by International Data Corporation (IDC).
The global technology research and consulting firm’s newly released Quarterly Mobile Phone Tracker shows that overall shipments for the first quarter of the year totaled 6.1 million units, up 2.4 percent on Q4 2016.
While this represents a second consecutive period of quarter-on-quarter (QoQ) growth, and offers a long-awaited glimpse of recovery, it is crucial to note that the market is still way below the levels it used to be, with shipments for Q1 2017 down -20.2 percent when viewed year on year (YoY).
The GCC’s biggest markets, Saudi Arabia and the UAE, were the prime drivers of this QoQ growth, with shipments up 5.1 percent and 4.3 percent, respectively, in Q1 2017. “Saudi Arabia is finally showing some signs of stabilisation following the major negative impact of Saudisation on the kingdom’s mobile phone industry, in 2016,” said Kafil Merchant, a research analyst at IDC. “However, there are still challenges in the market that need to be overcome.”
“Consumer buying behaviour cannot be changed overnight,” said Merchant. “As such, it will take another year before the ‘organised retail’ channel compensates for the massive drop in volumes previously pushed through dominant independent retailer channel, which has shrunk by almost 30 percent since the beginning of Saudisation in June 2016. Additionally, the lack of available credit in the channel is also dampening the shipment of mobile phones into the country, with many channel players pessimistic about the chances of the Saudi market returning to its previous levels anytime soon.”
Samsung continued to lead the GCC smartphone market in Q1 2017 with 28 percent share. The vendor’s shipments were up five percent QoQ, but it’s important to note that this does not include S8 and S8+ plus shipments. Apple remained in second place with 19.8 percent share, but saw impressive QoQ growth of 10 percent.
“Apple recorded the largest QoQ shipment growth of the region’s top five vendors,” said Nabila Popal, a senior research manager at IDC. “This can be directly attributed to the success of the iPhone 7 and 7 Plus models, which accounted for over 60 percent of the brand’s volume in Q1 2017. The gap in the market created by the Samsung Note 7 was still prevalent in Q1, and Apple’s flagship model comfortably capitalised on that gap. It will be interesting to see how this dynamic plays out over the coming quarters with the success of Samsung’s S8 and S8+ devices.”
IDC’s Quarterly Mobile Phone Tracker for Q1 2017 shows that the average selling price (ASP) of Android phones in the GCC has declined from $297 to $229 YoY.
“Despite the positive developments of the last two quarters, retailers and the channel are still struggling to keep up with growing costs in the region, consolidation in the market, and shrinking credit lines,” says Popal. “2017 will be a challenging year for all brands, and it will be interesting to see who survives this major shift in the landscape and whether there is a reshuffle in the rankings of the top players. We also have Nokia coming back, in the mid-ASP category initially, where many brands like Lenovo and Huawei have already marked their territory, and this is creating a lot of excitement in the channel. One thing’s for sure, this will be the space to watch for a highly competitive battle and possible shift in market share.”
