Dubai's IT market has grown to Dhs113bn in 2011, reveals Dubai Chamber study
- United Arab Emirates: Saturday, October 20 - 2012 at 11:14
- PRESS RELEASE
Dubai's trade in consumer electronics has grown from an estimated Dhs24bn in 2002, to Dhs113bn in 2011 while last year the emirate exported consumer electronics valued at approximately Dhs48bn which came from imports of Dhs65bn, finds a recent Dubai Chamber of Commerce and Industry study released on the sidelines of Gitex 2012.
According to the study, Dubai's exports are mostly destined to regional countries as it informs that Saudi Arabia, Iraq and Kuwait are the top three trade partners representing Dhs24bn (over 50%) of consumer electronics exports and has shown exemplary growth in recent years.
For example, consumer electronics exports to Saudi Arabia have increased at an average of 36% a year since 2008. Exports to other GCC countries have also seen rises of at least 26% year-on-year as in the case of Kuwait, while Qatar has shown a rise of up to 36% year-on-year in 2011 compared to the year 2010. Still, Saudi Arabia dominates export markets accounting for 26% of Dubai's consumer electronics exports followed by Iraq (18%) and Kuwait (5.4%).
Meanwhile, Dubai's imports typically originate from China which is a leading supplier of hardware including computers and handsets. Contrastingly, video games supplies from the US and Japan are strong - but not strong enough to impact the overall position of China as the importer of choice for the consumer electronics category.
Consumer electronics imports from China to Dubai were valued at approximately Dhs34bn in 2011.
In the last five years up to 2011, each sub-category of consumer electronic has experienced strong volume growth of at least 14%, and in some cases up to 26%.
The study further states that despite the rise of smart-phones, the overall contribution of handset devices to consumer electronics imports remains stable at around 50%. This is probably due to the diverse income classes to which handsets are sold as all buyers are not likely to have fourth generation networks in their respective countries.
Anecdotal evidence, however, suggests that smart phone adoption is on the rise and consumers are likely to be funnelling more income into handsets than other devices.
According to Business Monitor International (BMI), computer sales in the UAE were Dhs13bn in 2011 and are expected to reach Dhs13.8bn this year. Audio Visual and Gaming sales were Dhs4.6bn in 2011 compared to a forecast of Dhs4.9bn in 2012.
Sales of new flat-screen TVs are cited to be the main driver of growth for this category. Handset sales, meanwhile, are anticipated to increase the most, from Dhs1.5bn in 2011 to Dhs1.7bn in 2012 - an increase of approximately 13% over the year.
Drivers for growth
Earlier this year, the market experienced a deceleration due to exogenous factors such as supply constraints resulting from last November's floods in Thailand. Meanwhile, the growing popularity of tablets has also constrained demand for traditional notebooks. As the year has progressed, however, traditional desktop and laptop computers saw a migration to new operating systems such as Windows 7 which triggered a new cycle of hardware upgrades.
According to BMI, around one-third of the emirates' computer users still go for PCs based on Windows XP. BMI anticipates UAE computer hardware sales including PCs, notebooks and accessories to grow at a CAGR of 7% between 2012 and 2016.
LED TVs were strong-selling product categories in 2011 after prices dropped by between 5% and 25% for various models. Larger screen sizes, above 46-inch proved popular. This year, vendors continue to focus on LED and 3DTVs, with some of them following the promising launch of its HD TV service in the UAE by a triple-play service provider.
The study also informs that previous investments by service providers' fibre-optic cables to support high data capacity are now likely to deliver dividends while BMI projects the UAE's audio-visual and gaming market to grow at a CAGR of 6% in 2012-2016.
The steady growth of fixed and mobile broadband penetration will also be a significant driver of demand for handsets as connectivity devices. The introduction of much awaited smart-phones devices with bigger screens and more processing power will drive sales late into the year across the UAE and wider GCC. BMI forecasts handset sales growth at a CAGR of 5% to 3.8 million units in 2016 as the domestic market approaches saturation.
Arguably the most important determinant for growth in the medium to long term is the lifestyle conscious nature of such products. In the UAE, and the wider GCC, growth prospects for the sector are amplified partly because of the population dynamic of an emerging yet sizeable growing middle income class.
According to Economist Intelligence Unit forecasts, the GCC population will reach 53 million by 2020. As incomes rise, spending on luxuries typically rises as consumers tend to become more lifestyle-focused.
Another factor driving sales is the steady return of tourists that supports Dubai's all-important carry-trade. An influx of tourists at the beginning of 2011 helped support sales growth. Traders also cite the example of traditional festive seasons such as Eid and Dubai Shopping Festival (DSF) as important events in their annual sales diaries.
The study further states that other regional drivers for growth are access-related. The UAE being an efficient re-export regional hub and several regional markets are proving to be lucrative for companies that are establishing operations in Dubai, it states. This is compounded by the fact that competition among consumer electronics products remains relatively high because in comparison to other products and the flow of new products remain high.
Despite prevailing trends of converging technologies, consumers are faced with even more choice. The market for consumer electronics is likely to remain strong in the wake of lifestyle changes region-wide. The prospects for the sector are likely to improve as the regional economies forecast a reasonable growth ratio.
Furthermore, growing population and incomes underpin the growth-dynamic for the foreseeable future. The role of Dubai in these growth dynamics further underlines the importance of regional events such as Gitex, concludes the study.
Articles in this section are primarily provided directly by the companies appearing or PR agencies which are solely responsible for the content. The companies concerned may use the above content on their respective web sites provided they link back to http://www.ameinfo.com
Any opinions, advice, statements, offers or other information expressed in this section of the AMEinfo.com Web site are those of the authors and do not necessarily reflect the views of AME Info FZ LLC / 4C. AME Info FZ LLC / 4C is not responsible or liable for the content, accuracy or reliability of any material, advice, opinion or statement in this section of the AMEinfo.com Web site.