Boston, MA -- (ReleaseWire) -- 05/05/2014 -- The development of Croatia's consumer electronics market has been stymied by the challenging economic environment in the country, which has seen GDP contract in real terms between 2010-2013. Declining consumption, unemployment, currency depreciation and fiscal austerity have all squeezed demand for devices, countering the positive impact of some technology trends such as adoption of smartphones, tablets and smart-TVs. BMI believes big-ticket items such as TVs and PCs have been hardest hit by the economic challenges faced in Croatia, leaving the handset market as the outperforming subsegment.
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While there have been many challenges, we forecast stronger economic performance from 2015, which we expect to combine with declining average selling prices in several key product categories and the relatively low penetration rates to drive spending growth in the latter years of our forecast.
Headline Expenditure Projections
Computer Hardware Sales: USD527mn in 2013 to USD497mn in 2014; -5.8% in US dollar terms. Challenging economic conditions are limiting big-ticket purchases, while the shift in the composition of sales to cheaper tablets is an additional squeeze on the growth of sales value.
AV Sales: USD266mn in 2013 to USD280mn in 2014; +5.1% in US dollar terms. Demand for smart TVs is boosting growth, but cannibalisation of digital cameras and standalone mp3 players by multi-functional smartphones is a drag on performance.
Handset Sales: USD277mn in 2013 to USD290mn in 2014; +4.6% in US dollar terms. The handset market is expected to fare better in a challenging macro environment due to lower average selling prices and the support provided by operator smartphone sales as they look to generate value from their wireless data network investments.
Key Trends & Developments
The Croatian smartphone market has been an outperforming sub-segment of the consumer electronics market - and we expect this trend to continue in the medium term. The latest data from leading mobile operator T-Mobile show smartphone penetration in its subscription base reached 32% at the end of 2013, with smartphones accounting for 60% of handsets sold in Q413. We expect new services will continue to drive a healthy replacement/upgrade market as operators continue to invest in 3G and 4G wireless data network upgrades and expansion. Meanwhile, with the penetration rate still considerably below the level found in Western European markets, there is scope for this growth to continue over the medium term. We expect low cost Android vendors will be the ones to benefit by focus on the remaining pool of first-time buyers, with Huawei, ZTE, Lenovo and Alcatel in prime position to challenge market leader Samsung Electronics.
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