IDC: GCC Smartphone Shipments Continue Decline in 2018 Q2

The Gulf Cooperation Council (GCC) mobile phone market experienced a decline in shipments in the second quarter of 2018, according to IDC. Overall shipments to the region fell 9.9% year-on-year and 2.1% quarter-on-quarter, to total 5.8 million units.

The market’s poor performance stemmed from a fifth consecutive quarter of decline for the smartphone segment, with shipments of these devices down 3.4% quarter-on-quarter and 14.3% year-on-year. Meanwhile, shipments of feature phones saw mild growth of 0.9% quarter-on-quarter and 1.4% year-on-year. Many new brands are also focusing on the feature phone space, as these devices are reliable volume movers. This attention, combined with existing high demand for these cheap devices, is helping to spur the feature phone segment.

Smartphone shipments to Saudi Arabia were up for the first time in four quarters, with quarter-on-quarter growth of 0.9%. Overall mobile shipments to the Kingdom were up 1.7% over the same period. Research analyst Kafil Merchant commented:

“This growth primarily stem480x270 00001s from the implementation of a new import policy that requires all phones to carry IECEE certification. A consequence of this policy is that there has been a significant reduction in gray shipments to the Kingdom, with a subsequent increase in official shipments to meet demand. However, with the introduction of a dependent tax, causing millions of ex-pats to make plans to leave the country, vendors targeting the Saudi market will continue to face a significant challenge”.

In the UAE, smartphone shipments were down 10.9% quarter-on-quarter during the second quarter, with the country’s overall mobile market declining 8.8%. Senior research manager Nabila Popal remarked:

“The UAEext market continues to struggle, with speculation rife that Dubai is experiencing a secret recession that no one is openly talking about. This is not only true in the mobile space but across large swathes of the UAE retail sector. Indeed, traditional shops in the heart of old Dubai that used to be the centre of trade and commerce are shutting down faster than the temperature is rising”.

Elsewhere in the GCC, overall mobile shipments were down 2.8% quarter-on-quarter in Qatar, 5.4% in Bahrain, 5.6% in Oman and 0.5% in Kuwait.

In terms of the smartphone vendor landscape, Samsung maintained its lead in the second quarter of 2018, with a 34.2% share. Apple and Huawei followed, with respective shares of 24.3% and 16.5%. Popal continued:

“Huawei’s new product launches have seen it garner significant popularity in the market, as users are excited by the vendor’s integration of innovative technologies like AI into its smartphones. It is important to note that there is currently still more buzz than substance around AI, but once its use becomes more integrated in consumers’ lives, being able to offer such a feature will be a true advantage for any smartphone vendor.”

Another interesting development noted by IDC is the quarter-on-quarter growth enjoyed by a number of second- and third-tier smartphone vendors as they steadily penetrate the GCC market. Merchant added:

“Global brands like Oppo and Xiaomi have gained significant traction among low-income consumers. Oppo’s market share increased after it employed a relatively unique direct distribution strategy in the UAE that has seen the country become one of the vendor’s strongest markets in the GCC. Meanwhile, Xiaomi is performing particularly well in Qatar, capturing 19% share of the country’s smartphone market in the second quarter, even outperforming Apple. This comes on the back of some very successful strategic marketing efforts undertaken in conjunction with the vendor’s official distributor, Intertec”.

Looking ahead, IDC expects 2018 to be a very tough year for the industry, with overall mobile phone shipments to the GCC forecast to decline 12.9% year-on-year for the year as a whole. Given the prevailing market challenges, it will take some time for the market to adjust and for consumer behavior to stabilise.