Boston, MA -- (ReleaseWire) -- 10/03/2012 -- BMI View: The UAE's consumer electronics spending will grow by about 6% in US dollar terms in 2012 to US$3.8bn. In 2012 solid growth in consumer electronics sales is expected, but in addition to exogenous factors, this suggests that structural weaknesses still stand in the way of a more pronounced recovery, including weak credit conditions and Dubai's onerous debt repayment schedule. Despite these adverse factors, the outlook for household consumption has picked up in recent months and we are now forecasting this to grow by 8.0%in 2012. Spending on AV products had momentum in 2011 due to growing demand for new high-tier products such as 3D and LED TV sets. Another factor driving growth was a pick-up in the number of tourists, which has provided a boost to the all-important carry-trade. LED TVs was one strong-selling product category after prices dropped by between 5% and 25% for various models, with larger screen sizes proving popular. SLR cameras and smartphones were among other popular products.
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Headline Expenditure Projections
- Computer sales: US$1.9bn in 2011 to US$2.0bn in 2012, +5% in US dollar terms. Forecast in US dollar terms downwardly revised due to price erosion and a deceleration in retail sales growth in Q411 and Q112.
- AV sales: US$1.3bn in 2011 to US$1.3bn in 2012, +6% in US dollar terms. Forecast in US dollar terms unchanged, with flat-screen TV sets the main growth driver..
- Handset sales: US$410mn in 2011 to US$460mn in 2012, +12% in US dollar terms. Forecast in US dollar terms upwardly revised, with smartphones comprising above 50% of sales.
The UAE's score was 61.4 out of 100.0, which gave it first place in our latest MEA CE RRR table. BMI expects the UAE to remain a key regional market, with an ongoing improvement in consumer sentiment.
Key Trends & Developments
- Product innovation and price cuts will be important drivers of AV spending. Even with more content available, 3D TV prices have acted as a constraint for many consumers, at least initially. The average starting price for a 3D TV set in the region in 2011 was about US$2,500, with 40" to 60" 3D LCD models having a price range of about AED9,000-25,000. However, with average prices of 3D sets falling by up to 40%, further growth in this segment is expected in 2012.
- In 2012 the launch of more smartphone models based on the Android operating system should help to intensify competition, following a number of local distributor and vendor releases in 2011. Android's share of the market has increased dramatically and is expected to reach around 25% of all UAE handset sales in 2012, from nearly 205 in 2011. Meanwhile, the previously dominant BlackBerry from RIM has seen its share decline.
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