Page 87 - SAMENA Trends - September 2019

REGIONAL & MEMBERS UPDATES SAMENA TRENDS

GCC Mobile Phone Shipments Grow 11.5% Year on Year in Q2

The overall mobile phone market of
the Gulf Cooperation Council (GCC)
experienced robust year-on-year (YoY)
unit growth of 11.5% in Q2 2019, with
shipments totaling 6.5 million devices
worth $1.7 billion, according to the latest
figures announced by global technology
research and consulting firm International
Data Corporation (IDC). Quarter on quarter
(QoQ), shipments were up 8.0%, continuing
the growth seen in Q1 2019. Despite
shipments declining 4.5% YoY in Q2 2019,
the feature phone market experienced QoQ
growth of 5.5% to total 1.7 million units. The
smartphone market, spurred by particularly
strong performances in Saudi Arabia, the
UAE, and Qatar, totaled 4.7 million units, up Indeed, shipments of Huawei smartphones the year as a whole,” says Popal. “Despite
19.0% YoY and 8.9% QoQ. Combined mobile in the GCC were down only 10.6% on the the initial panic, Huawei’s shipments have
shipments declined in Bahrain (-5.9%), previous quarter in Q2 2019. “This is already resumed following a brief halt in
Oman (-4.4%), and Kuwait (-12.0%) QoQ; because a significant portion of Huawei June and are expected to return to normal
these declines were caused by a downturn shipments took place earlier in the quarter levels by end of 2019, as strong incentives
in smartphone shipments, with the feature and at an increased pace, which helped to and communications are put in place
phone segments remaining stable in each counteract the declines seen following the by the vendor to reassure channels and
of these countries. “Smaller GCC markets ban towards the end of the quarter,” says consumers alike about Huawei’s future.”
like Bahrain, Oman, and Kuwait have seen Nabila Popal, a senior research manager In the long term, IDC expects the GCC
their smartphone markets contract due to at IDC. “Furthermore, most of the negative mobile market to expand at a five-year
a reduction in consumer spending caused impact for Huawei was on their premium compound annual growth rate (CAGR) of
by the introduction of new levies, a difficult devices, whereas their midrange and 2.9% through to 2023. “Major events in
job market, and changing government entry-level devices, which make up the the region, such as Expo 2020 in the UAE
policies,” says Akash Balachandran, a bulk of their shipments, were significantly and the FIFA World Cup 2022 in Qatar,
senior research analyst at IDC. “Kuwait has less impacted. As a result, the overall along with an anticipated recovery in the
seen a significant degree of consolidation in quarterly volume of Huawei, and in turn the GCC’s smaller markets, will help sustain
terms of brands, while the implementation smartphone market itself, did not suffer as smartphone growth in the long term,” says
of new taxes (e.g., Utility Tax, VAT) has much as it could have done.” Additionally, Popal. “This growth will be further fueled
reduced the purchasing power of Bahraini the seamless timing of Samsung’s well- by the introduction and rapid proliferation
residents. In Oman, the government’s received budget and midrange offerings of 5G devices and other form factors, such
Omanization policy has caused a saw the vendor capture whatever share as foldable devices, that are also expected
significant drop in the expat population, was dropped by Huawei, helping to offset to drop in prices quite rapidly towards
which has naturally impacted the mobile any potential declines the GCC smartphone the end of the five-year forecast period.”
phone market. By contrast, Saudi Arabia’s market may have suffered. “The success “While many people seem to believe 5G will
smartphone market is seeing growth as of Samsung’s new A-series range – the be the salvation to all the challenges facing
the market finally stabilizes following all successor to the previously popular the stagnating smartphone industry, it’s
the upheaval caused by domestic policy J-series range – highlights the market imperative for market players to realize
and regulatory changes in recent years.” shift seen towards midrange devices,” that releasing 5G devices alone won’t be
Despite May’s announcement of a ban says Popal. “The A-series represents a enough to fuel the required growth,” warns
on U.S. companies doing business with great value-for-money proposition and Balachandran. “The provision of excellent
Huawei, the GCC’s smartphone vendor its introduction offers consumers a timely support, widespread networks rollouts
rankings remained unchanged in Q2 2019, alternative to Huawei devices. This saw from telecom operators, comprehensive
with Samsung first (42.9% unit share), Samsung increase its unit share of the customer education on the real-world
Huawei second (22.8%), and Apple third GCC smartphone market by 8.4 percentage benefits of 5G, and the release of devices
(18.4%). While Huawei experienced a sharp points from the previous quarter.” Looking at the right price point will all be critical
halt in shipments in June, immediately ahead, IDC expects overall GCC mobile if 5G is to have a significant impact on
following news of the ban, its overall phone shipments to close 2019 up 3.5% overall market volumes and reduce the
volumes for the quarter were not impacted YoY. “This growth will be spurred entirely ever-lengthening refresh cycle.”
as significantly as anticipated, despite a by the smartphone market, which is set to
third of the quarter being hit so drastically. post a 10.1% YoY increase in shipments for
87 SEPTEMBER 2019