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Samsung holds more than 40% of GCC smartphone market in 2019

(Image credit: Future)

Samsung continued to dominate the smartphone market in the fourth quarter of last year as well for the year in the Gulf Cooperation Council (GCC) countries as Huawei was not a strong contender due to the lack of Google Mobile Service on its devices.

The South Korean vendor increased its market share to above 40% from the second quarter after the US added Huawei to the Entity List.

Samsung now holds 41% market share in the fourth quarter, down from 46% in the third quarter, as Apple was aggressive in the fourth quarter with its iPhone 11 devices and Xiaomi with its Note 8 models.

The contraction in Samsung's unit share largely stemmed from supply chain shortages in the channel and the exceptionally strong performance of Apple and Xiaomi, which increased their shipments 22.6% and 51.4%, respectively.

Ramazan Yavuz, a senior research manager at International Data Corporation (IDC), said that demand for Apple's newly released iPhone 11 series exceeded all previous market predictions.

Moreover, he said that Xiaomi increased its share of the GCC smartphone market to 6.8% following the strong expansion of its distribution network and the successful release of popular models like the Note 8 that has been very well received by consumers.

Shipments of Huawei devices to the region fell 1.7% QoQ in the fourth quarter, with the vendor accounting for 15.7% share of the smartphone market, a significant decline from 24.3% in the fourth quarter of 2018.

"Given the challenges facing Huawei, the vendor performed exceptionally well in the fourth quarter. The annual Mega Sales event in Saudi Arabia helped bolster its overall numbers for the GCC. While Huawei is unlikely to make up much ground in the coming quarters, its impending launch of a new mobile OS and integration of its app store with its new releases is likely to cement its position as one of the top three vendors in the GCC,” Akash Balachandran, senior analyst at IDC, said.

UAE and Saudi Arabia lead the pack

Smartphone shipments into the six GCC countries increased by 6.3% quarter on quarter to 5.15m units in the fourth quarter of last year compared to 4.84m in the third quarter.

The UAE and Saudi Arabia saw its quarter-on-quarter (QoQ) smartphone shipments increase by 9.9% and 6.7% respectively, in the fourth quarter.

Together, these two countries account for more than 75% of the GCC smartphone market. QoQ, smartphone shipments also grew in Bahrain (9.6%), Kuwait (2.1%), and Qatar (3.0%). Oman was the only GCC market to suffer a decline, with smartphone shipments falling 2.2% over the quarter.

Smartphones accounted for 78% of overall mobile phone shipments, up from 73.2% in the third quarter.

The 18.1% decline in feature phone shipments to 1.45m units stemmed from the fact that telcos and channel players across the region (particularly in Saudi Arabia and Bahrain) have actively started to move away from offering devices that support the 2G spectrum.

In terms of value, smartphone shipments increased 11.2% QoQ to $1.2 billion, while the value of feature phone shipments slumped 20.8% to $28.9 million.

Balachandran said that the shipment growth seen in some of the smaller GCC markets is a positive sign for the overall region, particularly as it comes after long periods of contraction.

Previously, he said that shipments had been constrained in these markets by the introduction of new levies and taxes, shifting government policies, and challenging job conditions brought about by nationalization programs.

Looking ahead, vendors and channel partners are expected to release new form factors and increasingly push 5G devices to consumers over the coming year. Apple is slated to jump on the 5G bandwagon in late 2020, while Huawei will release the market's third major mobile operating system, Harmony OS. “The UAE's Expo 2020 event will also be a major boon for players in the GCC mobile industry. However, the COVID-19 outbreak is likely to dampen mobile phone shipments over the course of the year, with IDC's initial forecast of growth for the GCC market in 2020 being downgraded to a year-on-year decline of 1.4%,” Balachandran said.

Yavuz said that the COVID-19 outbreak has created a lot of uncertainty in the smartphone industry and has had a huge impact on the supply chain for mobile devices.

"As a result, our growth forecast for the GCC's smartphone market has been revised downwards. After analysing various factors and considering multiple recovery scenarios, we are currently implementing the most probable scenario analysis and expecting a recovery in the overall situation by the second half of the year,” he said.