Boston, MA -- (ReleaseWire) -- 02/12/2014 -- A government policy to reduce Saudi Arabia's reliance on foreign workers is having a negative impact on the sales of mobile handsets in the kingdom. Local retailers are reporting that their sales have nearly halved as a result of this. Saudi Arabia's high mobile penetration rate has been largely boosted by the presence of a large number of foreign workers, many of whom were not included in official population statistics. BMI sees the government's move having a negative impact on mobile device sales as well as total mobile subscriptions in the market; however, we expect average prices to rise as a result.
Headline Expenditure Projections
- Computer Hardware Sales: US$2.2bn in 2013 to US$2.6bn by 2017. Lower PC sales growth in early 2013 still weighs on our forecast, but this will partly be offset by strong tablets sales during the same period.
- AV Sales: US$3.4bn in 2013 to US$4.6bn in 2017. The latest flat-screen TVs and home cinema systems will continue to generate strong growth in the country's outlook and maintain AV as the key component of the consumer electronics market.
- Handset Sales: US$1.1bn in 2013 to US$1.5bn by 2017 as smartphones and connected devices for internet usage gain in popularity. Vendors are bringing devices to the market more quickly than previously, catering to the strong demand for the latest developments in the market.
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Key Trends And Developments
The 'Saudisation' policy alluded to above aims to replace cheaper foreign workers with locals in an attempt to improve the local economy and lower the extent of earnings leaving the country through remittances. The impact of this on the consumer electronics market will be most keenly felt in the mobile handset segment, as we believe the majority of foreign workers are not heavy spenders in the audio-visual or computing segments. The trend has implications for vendors, particularly at the lower end of the mobile devices spectrum, with more limited demand for basic handsets and greater scope for selling new smartphones. However, we believe that market losses will be somewhat mitigated by a boost to replacement cycles as wealthier subscribers seek the latest devices.
US-based chip maker Intel launched its fourth-generation Intel Core processors in Riyadh, Saudi Arabia amid the introduction of a range of new ultrabook and 2-in-1 devices. The general manager at Intel KSA, Abdulaziz al-Noghaither, said the company has more than 50 different 2-in-1 designs in the pipeline across a range of price points, including premium ultrabook 2-in-1s powered by the new Intel Core processors. Al- Noghaither also said the company will bring its next generation 22 nm quad-core and Intel Atom systemon- chip (SoC) for tablets by end-2013.
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