Lack of innovation causes decline in GCC’s mobile phone market; IDC

IDC reckons socioeconomic factors are also to blame for decline in smartphone shipments

Tags: International Data Corporation
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Lack of innovation causes decline in GCC’s mobile phone market; IDC Samsung, Apple, and Huawei lead the way in the region's smartphone space, accounting for a combined 75% of the units shipped in Q1 2016
By  Aasha Bodhani Published  May 29, 2016

The International Data Corporation (IDC) has revealed that mobile phone shipments to the GCC suffered a double-digit decline in Q1 2016, resulting in a 10.3% decline on the previous quarter and 13.2% decline compared to Q1 2015.

IDC blames the lack of smartphone innovation and a variety of socioeconomic factors, such as low oil prices, reduced government spending and ongoing political instability.

Samsung, Apple, and Huawei lead the way in the region's smartphone space, accounting for a combined 75% of the units shipped in Q1 2016. Samsung reigns the top spot with 44% share, an increase on the previous quarter that was spurred by the launch and subsequent success of the vendor's Galaxy S7 flagship device. Apple accounted for 19% of the market, followed by Huawei with 13% share.

"In today's challenging economic environment, consumers are increasingly looking for an attractive value proposition, and it is for this reason that phones priced less than $300 now make up 52% of the GCC's smartphone market," said Nabila Popal, research manager for mobile handsets at IDC Middle East, Africa, and Turkey.

"Samsung's modestly priced Samsung J series is performing strongly in the region, while Huawei and Lenovo have long since proven that this formula works, with the majority of their success firmly placed in the low to mid-range price segment."

Huawei has shifted its focus to higher-end models in recent quarters, and sales of these devices are growing. However, IDC's 'Q1 2016 Mobile Phone Tracker' shows that the majority of its shipments in the GCC still come from low to mid-range models priced below $300.

The proportion of feature phones continued to decline in Q1 2016, although the rate of contraction has stabilised over the past few quarters. Consistent demand for feature phones persists in the GCC, with the devices accounting for around 21% of total mobile phone shipments in Q1 2016.

"The prevailing sentiment is that 2016 will be a difficult year for smartphone growth," continued Popal. "Consumer spending has been hit hard across the region, and it is the consumer segment of the market that is the major driving force behind demand for mobile devices. This is being compounded by the lack of major innovation currently taking place in the industry.

"While there are always some technological advances from one flagship launch to another, these incremental improvements aren't really enough to warrant device upgrades, which is leading to a lengthening of the previously short smartphone refresh cycle. As such, we are seeing vendors and channels brace themselves for a tough year ahead."

IDC expects the GCC's mobile phone market to continue to stutter throughout 2016, with a slight recovery possible by the end of the year.

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