GCC mobile phone market at five-year low

IDC figures show 2018 mobile phone shipments reached lowest level since 2013

Tags: IDC Middle East and AfricaSaudi Arabia
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GCC mobile phone market at five-year low 2018 was the worst year for mobile phone sales in the GCC since 2013.
By  Mark Sutton Published  February 20, 2019

Mobile phone shipments in the GCC hit a five-year low last year according to market figures from IDC.

Mobile shipments were down to 23.6 million units, a decline of 9.4% from the previous year, and the lowest since 2013. The market is down 30% from the 2015 peak of 33.9 million units shipped.

The last quarter of 2018 saw a decline of 2.2% from the previous quarter.

Kafil Merchant, a research analyst at IDC said: "The GCC's mobile phone market is undergoing a considerable challenge, with shipments shrinking significantly in 2018. This decline is being caused by a number of factors, including economic uncertainty, a lack of major innovation in new devices, continuous price increases, and lengthening refresh cycles. Since smartphone penetration is already very high in the region, these factors are combining to make consumers question whether it's worth upgrading their device. Many are concluding that there is simply no good reason to purchase the latest new smartphone on the market."

IDC said that Saudi Arabia, the biggest market in the GCC accounting for 54% of the regional market, declined 2.3% quarter on quarter (QoQ) and 8.2% year on year in Q4 2018.

"Growth continues to evade the Saudi market after the major double-digit declines that have characterized the last few years," said Nabila Popal, a senior research manager at IDC. "However, with such drastic declines now a thing of the past, it seems the market may finally be on the road to recovery. The most significant change in the Saudi smartphone landscape in Q4 2018 was the growth of Chinese brands Huawei and Honor, while the top two brands historically, Samsung and Apple, both declined."

Quarter-on-quarter, overall mobile phone shipments were also down 2.4% in the UAE, 5.4% in Oman, and 8.6% in Kuwait, while Bahrain and Qatar enjoyed respective QoQ growth of 2.1% and 7.6% in Q4 2018. Feature phone growth of 12.1% propelled the market in Bahrain, while Qatar witnessed robust 9.8% growth in smartphone shipments - the only GCC market where smartphones grew quarter on quarter.

Looking at the smartphone vendor landscape for the whole year, Samsung and Apple retained the top two spots with 32.3% and 23.7% respective shares of the GCC market in 2018. However, it is important to note that Samsung's share was down 4 percentage points year on year, while Huawei's share increased by 8 points over the same period.

"Huawei's growth in the region, at such a time when leading brands are declining, is to be commended," said Popal. "There is a tendency to attribute this growth purely to good features, low prices, and great marketing, but Huawei's success in the GCC has also been influenced by its focus on providing dedicated and customized channel support. By doing this, Huawei is able to respond quickly to local market conditions and consumer preferences, while directly helping its channel partners clear slow-moving stock."

Looking ahead, IDC does not expect to see any major recovery in 2019. "The arrival of 5G and foldable devices this year may bring some movement to the market as they will finally feed the intense craving from consumers for some genuine innovation," Popal added. "However, given the high price tags likely to come with these devices, I do not expect them to bring double-digit growth to the struggling smartphone market."

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