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Saudi smartphone market fell 15.3% in 2018 – IDC

Saudi smartphone market fell 15.3% in 2018 – IDC

A reduction in government subsidies and the implementation of expat dependent taxes have all hit the market

Saudi smartphone women Inside Riyadh's Kingdom Centre Shopping Mall

Saudi Arabia’s smartphone market posted a 15.3 per cent year-on-year decline in shipments in 2018, according to the latest report by International Data Corporation (IDC).

Smartphone shipments to the kingdom fell to 7.5 million in 2018, down 48 per cent compared to the market’s peak in 2015.

The market has been in a “dire situation since 2016”, when the first aggressive decline occurred, the report said.

IDC’s data found that there was a 30 per cent year-on-year decline in smartphone shipments in 2016, followed by a 13 per cent fall in 2017.

“These massive double-digit declines have been caused by many different factors, beginning with the Saudisation of the mobile phone industry in 2016 that caused more than 40 per cent of independent retailers to shut down,” said Nabila Popal, senior research manager for mobile phones at IDC.

“Then there was the introduction of VAT in 2017, as well as a reduction in government subsidies and the implementation of dependent taxes – all of which caused a significant reduction in consumer disposable income. These factors and the overall lack of innovation in the smartphone space have led to a lengthening of the refresh cycle.

“Indeed, consumers are becoming smarter, carefully analysing the cost versus features of all new devices, and simply do not see the need to upgrade their devices as often as before,” she explained.

The top brands for 2018 as a whole were Samsung, Apple, and Huawei, with market shares of 34.8 per cent, 28.4 per cent, and 19.6 per cent, respectively.

However, by the final quarter of the year, Huawei moved into the second place, pushing Apple down into third. Honor also grew to reach the fourth position, the report said.

Overall, IDC also found that smartphone shipments in the wider GCC region were also down 12.2 per cent year-on-year in 2018.

“With Saudi Arabia being biggest market in GCC, accounting for 47 per cent of all smartphone shipments to the region last year, any declines felt in this market are bound to affect the region’s overall performance,” the report stated.

Looking ahead, IDC said that “the worst is over” for the Saudi smartphone market, which is now starting to stabilise.

While the Saudi smartphone space is unlikely to see any major growth in 2019, forecasts show a flat or very slight decline in the market, the report stated.

“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,” said Popal.

“However, given the high price tags likely to come with these devices, they will take time to gain traction. So, while they will undoubtedly generate some long overdue excitement, I wouldn’t expect them to bring double-digit growth to the struggling smartphone market.”


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