Laptops sales to stay strong as Egyptian desktop market turns around over next few years, says IDC

According to a new IDC study, the stagnant economy and only a very modest rise in per capita income last year led to a total PC shipment dip of 0.4% in units and 4.8% in revenue. By contrast, the mobile form factor jumped a substantial 17.5% in volume and 14.2% in revenue, representing an increasing proportion of the overall Egyptian PC market. The x86 segment also expanded, but accounted for less than two percent of the total market. Given the likelihood of an economic recovery, increased demand from the education and business sectors, and government efforts to promote IT, IDC expects the Egyptian market to rebound, with shipment volume increasing by an annual average of 18.5% through 2009.

With fierce competition between both PC vendors and processor manufacturers keeping prices low, desktops again dominated the Egyptian PC market in 2004, accounting for more than 90% of unit shipments. While the government program a "PC for Every Home" lost some momentum last year, it should boost desktop sales this year, which IDC expects to jump by nearly 12% in units. Notebook shipments will accelerate as businesses increasingly seek the advantages of the flexibility offered by portables. Growth in the x86 segment, although remaining in positive numbers, will slow. "The areas to watch are the desktop and portable user segments, both of which remain largely underserved," says Mediha Gramos, IDC Analyst, Systems Group. "As the economy picks up, the unmet need will reveal itself and you'll see substantial investments in IT hardware, especially form the government and education sectors."

Traditionally the stronghold of local assemblers, the Egyptian PC market has been increasingly characterized by the presence of international vendors, which supply most of the portables and x86 servers to the country. HP, Dell, Acer, and IBM together grabbed more than 87% of the international brand-name market. Nevertheless, more than twenty local assemblers, including large ones like Centra, Nordix, Metra, and Better Business, accounted for the lion's share (73.7%) of total PC shipments in 2004. "International vendors have a real fight on their hands," says Gramos. "Although they gained share in 2004 and are likely to experience growth as the market grows, both governments and businesses are turning towards local assemblers. The best bet for international vendors for keeping their toehold in Egypt is to target subsidiaries of international companies that are obliged to buy international brands due to global resource requirements."

Despite the weak economy and the large number of poor, the home segment was again the largest in terms of unit volume in 2004. It was followed by small and medium-sized businesses in second and the government in third. Together, these three groups represented 69% of unit shipments last year. "The home segment has tremendous potential," says Gramos. "The government PC push, which allows for monthly payments to be made over the long-term, and the low price of desktops will keep this user group robust over the next few years. Things could grow faster overall if the government manages to speed up the privatization process."

IDC's Egypt Personal Computing 2005-2009 Forecast and 2004 Vendor Shares provides detailed analysis, conclusions, and forecasts regarding the dynamics of the country's evolving market for personal computers. The information in this study provides an understanding of the changes and challenges facing the PC industry in this emerging market. Numbers and analysis are based on information gathered from interviews with the leading IT companies (vendors, distributors, assemblers, system integrators, value-added resellers, and dealers) in the Egyptian market.