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GCC mobile market shows signs of recovery but growth woes remain

The GCC mobile phone market is of course doing well but it is definitely not doing great.

The market started 2017 off on a positive note with overall shipments for the first quarter of the year totalling 6.1 million units, according to the latest figures by International Data Corporation (IDC). The figure represents a 2.4 per cent growth compared to Q4 last year and a second consecutive period of quarter-on-quarter (QoQ) growth.

However, the market is still way below the levels it used to be, with shipments for the first quarter down -20.2 per cent when viewed year on year (YoY), the global technology research and consulting firm notes.

Even though the market showed signs of recovery in the first three months of this year, but it is projected to finish the year down -1.5 per cent.

Growth markets

The GCC’s biggest markets, Saudi Arabia and the UAE, were the prime drivers of this QoQ growth, with shipments up 5.1 per cent and 4.3 per cent, respectively, in Q1 2017.

“Saudi Arabia is finally showing some signs of stabilisation following the major negative impact of Saudisation on the kingdom’s mobile phone industry, in 2016,” says Kafil Merchant, a research analyst at IDC.

Saudisation hangover

The IDC analyst, however, says that “there are still challenges in the market that need to be overcome.”

“Consumer buying behaviour cannot be changed overnight,” continues Merchant. “As such, it will take another year before the ‘organised retail’ channel compensates for the massive drop in volumes previously pushed through dominant independent retailer channel, which has shrunk by almost 30 per cent since the beginning of Saudisation in June 2016. Additionally, the lack of available credit in the channel is also dampening the shipment of mobile phones into the country, with many channel players pessimistic about the chances of the Saudi market returning to its previous levels anytime soon.”

Samsung takes lion’s share

Samsung continued to lead the GCC smartphone market in Q1 2017 with 28 per cent share. The vendor’s shipments were up 5 per cent QoQ. This figure does not include flagship S8 and S8+ plus shipments, which were launched globally towards the end of Q1, and their shipments will be accounted for in the figures for Q2.

On the other hand, Apple remained in second place with 19.8 per cent share, but saw impressive QoQ growth of 10 per cent.

“Apple recorded the largest QoQ shipment growth of the region’s top five vendors,” says Nabila Popal, a senior research manager at IDC.

“This can be directly attributed to the success of the iPhone 7 and 7 Plus models, which accounted for over 60 per cent of the brand’s volume in Q1 2017. The gap in the market created by the Samsung Note 7 was still prevalent in Q1, and Apple‘s flagship model comfortably capitalized on that gap. It will be interesting to see how this dynamic plays out over the coming quarters with the success of Samsung’s S8 and S8+ devices.”