GCC mobile market shows signs of recovery in Q1 but still well below previous years

The GCC mobile market showed signs of recovery in the first quarter of 2017 but shipments were still well below the previous year, according to IDC.

The research firm said shipments during the first quarter totalled 6.1 million, up 2.4 per cent on Q4 of 2016, but down 20.2 per cent year-on-year.

Read: Reversing the Gulf’s smartphone slump

Growth was driven by Saudi Arabia and the UAE where shipments were up 5.1 per cent and 4.3 per cent respectively but IDC said conditions remained challenging due to the former’s Saudisation of the mobile industry.

“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,” said Kafil Merchant, research analyst at IDC.

“However, there are still challenges in the market that need to be overcome.”

In March 2016, the kingdom announced that all mobile shops would need to employ 50 per cent Saudi staff by early June and 100 per cent by September.

This was resulted in many shops closing or being shut down by inspectors and a 30 per cent dip in mobile volumes pushed through independent retailers.

Read: Another 1,000 Saudi mobile shops shut from Sept-Nov

Merchant estimated it could be another year before Saudi retail channels compensate for the “massive drop”.

“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,” he said.

During the first quarter Samsung lead the GCC market with 28 per cent share and a 5 per cent quarter-on-quarter increase in shipments not including its latest S8 and S8+ devices.

Apple retained second place with 19.8 per cent share and the largest quarter-on-quarter growth of 10 per cent due to the success of the iPhone 7 and 7 Plus models, which accounted for 60 per cent of its volume.

“The gap in the market created by the Samsung Note 7 was still prevalent in Q1, and Apple’s flagship model comfortably capitalised 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,” said Nabila Popal, senior research manager at IDC.

The average selling price for the quarter stood at $229, down from $297 the previous year with premium Android handsets hit particularly hard. Shipments in the $450+ category accounted for 17 per cent of the total down from 30 per cent in Q1 2016 and 50 per cent in Q1 2015.

However, vendors including Lenovo, Huawei, Alcatel and Samsung were seen having success in the less than $200 price band, with strong year on year growth in volumes.

Popal said 2017 would be a “challenging year for all brands” as retailers struggle to keep up with growing costs, consolidation and shrinking credit lines.

“It will be interesting to see who survives this major shift in the landscape and whether there is a reshuffle in the rankings of the top players,” he said pointing to the return of the Nokia brand via HMD as one potentially disruptive factor.

Read: Nokia phone brand plans Q2 return to Middle East, regional hires