It was once a playground for smartphone makers, as the Gulf’s young,
tech- savvy consumers splurged on the latest status symbol handset.
But a regional economic downturn, diminished spending power, new taxes
and job insecurity have tempered enthusiasm for premium handsets around
the region.
Both Samsung and Apple have reported falling profits in the past week.
It comes on the heels of a shock revenue warning from Apple last month
that roiled global stock markets, as iPhone sales in emerging markets
fell short of expectations.
Global smartphone shipments recorded a negative year-over-year growth
rate in the fourth quarter of 2018, for a third consecutive quarter,
according to IHS Markit.
Shipments reached 365.2 million units in the last three months of 2018 —
a decline of 5.7 percent. Over the year, shipments dropped 2.4 percent
to 1.41 billion units according to preliminary data.
Last month Apple warned that a strong dollar, differing timings for the
launch of its top-of-the-range iPhones and economic weakness in emerging
markets would crimp revenue growth.
While China was the cause of much of the Californian firm’s woes,
smartphone sales in the Gulf — for all manufacturers — have also been in
retreat. Across all manufacturers, telecom handset sales in the UAE
totaled 4.92 billion dirhams ($1.34 billion) in the first nine months of
2018, down 14.6 percent year-on-year, according to data from research
firm GfK.
The pace of decline appears to be accelerating, with sales in the third
quarter of last year 21.9 percent lower than a year earlier.
FASTFACTS
A regional downturn, less spending power, new taxes and job insecurity have cooled enthusiasm for premium handsets.
Saudi Arabia suffered a smaller drop, with telecom sales totalling SR
10.43 billion, down 5.7 percent year-on-year. Like in the UAE, sales
declines are steepening, with third-quarter revenues 10.6 percent lower
versus a year earlier.
Fledgling and more-established Chinese smartphone brands are completely
changing the smartphone handset in the Middle East, North Africa and
Pakistan (MENAP) region, said Stavros Synodinos, GfK business group
manager for telecoms and operators in Dubai.
More than 60 percent of the MENAP smartphone sales are mid-price models
of $100-$300, increasing their market share versus 2017, notes GfK,
which measures retail sales, rather than shipments. “Mid-Premium phones
of $300-500 are the next big thing,” said Synodinos.
Fragile consumer confidence appears to have hurt sales of premium
smartphones, but sales of low-cost smartphones from manufacturers such
as Huawei’s Honor subsidiary have proved more resilient.
IDC tracks smartphone shipments, rather than sales, and its data differs
from that of GFK. Samsung continues to lead the Gulf’s smartphone
sector, holding a market share of 31.2 percent of shipments in the third
quarter of 2018 despite a 3.0 percent drop in its shipments versus the
prior three months, according to IDC.
Huawei (18.7 percent) and Apple (25 percent) complete the top three.
Samsung has been steadily losing market share, albeit as the market has
grown. In 2013, its smartphone shipment share was 60 percent, falling to
45 percent in 2015, IDC data shows.
For all brands, IDC research reveals that in the third quarter of 2018
smartphone shipments to the six countries of the Gulf Cooperation
Council (GCC) rose 1.1 percent quarter-on-quarter to 4 million handsets,
ending five successive quarters of declines.
Cheaper, “feature” phones increased 6.7 pecent over the same period to
1.9 million handsets. That means total phone shipments rose 2.9 percent
to 5.9 million handsets, with Saudi Arabia, Qatar and Kuwait mostly
driving this growth.
Smartphones’ share of the handset market is declining. In 2015,
smartphones accounted for 77 percent of all handsets shipped to the
Gulf, according to IDC data. That was down to 68 percent by the third
quarter of last year.
Total Saudi phone shipments — including both smartphones and feature
phones — were up 8.4 percent quarter-on-quarter, a rise IDC said shows
the waning impact of tax increases.
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