Mobile phone shipments to Saudi Arabia fell 4% in Q2

Mobile phone shipments to Saudi Arabia declined 4.2 percent quarter-on-quarter in Q2 2017, marking the largest decrease among the Gulf Cooperation Council (GCC) countries, as Saudization of the Kingdom's mobile phone industry continues to impact the market.

Technology research firm International Data Corporation (IDC) said in a recent report that it expects the declines to reverse by the end of this year as the market gradually adjusts to the policy changes in the Kingdom.

"This policy (Saudization) has caused a shift away from independent retail, with consumers gradually moving to the organized retail channel, which is heavily engaging with vendors to provide more attractive prices and offers,” Kafil Merchant,  research analyst at IDC (Middle East, Africa, and Turkey), said in the report.

“The independent retail channel is experiencing a major slowdown as a result of restrictive credit limits and lower marketing support from vendors.”

GCC’s other biggest market, the United Arab Emirates, saw a 1.6 percent growth QoQ in the second quarter this year.

Shipments to Qatar grew 2.7 percent QoQ, the report said.

"As a result of the embargo led by Saudi Arabia and the UAE, gray shipments into the country have actually decreased," Nabila Popal, senior research manager for mobile phones (AR/VR, and displays), said in the report.

“Official distributors have been able to profit from this by increasing official shipments to Qatar coming directly from non-embargo countries," she added.

The Gulf mobile phone market as a whole was “relatively flat” in Q2 2017. IDC’s quarterly mobile phone tracker showed that overall shipments for the quarter totaled 6.4 million units, representing a decline of 1 percent QoQ and 1.3 percent year-on-year (YoY).

“This contrasts starkly with the steep 20.2 percent YoY decline seen in Q1 2017, suggesting the market is beginning to show some welcome signs of recovery,” the report said.

In terms of vendors, Samsung led the GCC smartphone market in Q2 2017 with 38.1 percent unit share, posting a 0.4 percent QoQ increase in shipments.

Apple stood in the second place with 20.9 percent share, but saw its shipments decline 20.2 percent QoQ.

"This downturn experienced by Apple is partly a seasonality issue and partly due to anticipation around the launch of the new iPhone in Q4 2017," Popal said.

IDC expects the GCC market to close relatively flat in 2017, with a 0.6 percent YoY decline in mobile phone shipments forecast for the year as a whole.

In 2018, the market is estimated to grow 9 percent YoY, stabilizing further in the years ahead with average annual growth of 5 percent forecast for each year through to 2021.