GCC mobile phone market is under pressure

The GCC mobile phone market is under pressure as the COVID-19 pandemic hits demand. The number of mobile phones shipped to the GCC countries declined 10.3% quarter-on-quarter (QoQ) in Q2 2020 to a total of 4.9 million units, according to new research from International Data Corporation (IDC).

IDC’s latest Global Quarterly Mobile Phone Tracker shows that smartphone shipments were down 6.8% QoQ to 4.2 million units, while the feature phone market plummeted 25.3% to 0.8 million units. The value of smartphone shipments was down 16.8% QoQ to $1.3 billion, while the feature phone market’s value plunged 24.0% to $15.4 million.

Explaining why the GCC mobile phone market is under pressure, Akash Balachandran, IDC’s senior research analyst said, “While supply shortages impacted the market’s performance in Q1 2020 and the early weeks of Q2 2020, a steep decline in consumer demand was the primary cause of the market’s decline. COVID-related lockdowns and measures resulted in physical retail closures for extended periods of time across the region, precipitating a major decline in demand.”

Saudi Arabia accounted for 53.8% of all smartphone units shipped within the GCC in Q2 2020. “While there was a significant decline in demand across retail channels due to varying states of the lockdown being implemented in Saudi Arabia, shipments into the country were less affected,” Balachandran added. “Indeed, the planned implementation of a VAT increase in Saudi Arabia from July 1, 2020, caused channels to import larger quantities of smartphones before the change took place.”

Among brands, Samsung continued to lead the GCC smartphone market in Q2 2020, with 39.5% unit share and a 25.9% value share. Samsung was able to retain value and extend its unit share as it was relatively less impacted by supply shortages than other brands and cushioned by a shorter refresh cycle (particularly in the low to mid-range price bands).

Apple saw reduced demand and shipments as consumers and the channel alike took a cautious approach to purchase expensive high-end devices. Despite this, Apple accounted for 18.5% unit share of the GCC smartphone market in Q2 2020 and a 50.8% majority share of its value.

Xiaomi continued to post unit and value growth following the introduction of its new line of Note models in the previous quarter, accounting for 9.9% unit share and 5.7% value share.

Looking ahead, IDC expects the GCC smartphone market to decline a further 1.0% QoQ in Q3 2020. “Across the GCC region, the potential for a second wave of COVID-19 cases, the return of lockdowns, stagnating oil prices and economies and weakened consumer and commercial spending will push any real recovery towards the end of the year. While pent-up demand from consumers caused an immediate surge in smartphone sales after lockdowns were relaxed, the second half of the year is expected to perform slightly weaker as the region’s economies are not showing signs of recovery and consumer demand is weakening after the initial pent-up demand was met,” stated says Ramazan Yavuz, senior research manager at IDC.

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