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Nigeria Jittery As Saudi Smartphone Market Slumps

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With Saudi Arabia’s smartphone market having experienced a 15.3 percent year-on-year decline in shipments in 2018, according to the latest figures announced by International Data Corporation (IDC), Nigeria may be experiencing a lull in the market also due to socio-economic issues.

The global technology research and consulting firm’s newly released Quarterly Mobile Phone Tracker shows smartphone shipments to Saudi Arabia fell to 7.5 million in 2018, down 48 percent on the market’s peak in 2015.

The Saudi market’s performance was broadly in line with the overall trend of the wider Gulf Cooperation Council (GCC) region, where smartphone shipments were down 12.2 percent year on year in 2018.  With Saudi Arabia being the biggest market in GCC, accounting for 47 percent of all smartphone shipments to the region last year, any declines felt in this market are bound to affect the region’s overall performance.

However, Africa’s overall mobile phone market remained flat from Q1 2018 although smartphone shipments declined for the second successive quarter. The firm’s published Quarterly Mobile Phone Tracker shows that a total of 52.1 million mobile phones were shipped in Q1 2018, down 6.3 percent quarter on quarter (QoQ) and 3.9 percent year on year (YoY), with the continent’s two biggest markets – Nigeria and South Africa – underperforming and posting QoQ declines of 6.4 percent and 27.4 percent, respectively. This trend continued throughout the year.

“Nigeria’s modest performance can be attributed to the fact that smartphone adoption continues to be hindered by expensive broadband rates and slow internet connectivity,” says Nabila Popal, a senior research manager at IDC. Also, the volatile economic situation in the country, aggravated by political uncertainties further retarded the rise in shipment into the country.

The Saudi smartphone market has been in a dire situation since 2016 when the first aggressive decline occurred. IDC’s data shows there was a 30 percent year-on-year decline in smartphone shipments in 2016, followed by a further 13 percent fall in 2017 and now a 15 percent drop off in 2018.

“These massive double-digit declines have been caused by many different factors, beginning with the Saudization of the mobile phone industry in 2016 that caused more than 40 percent of independent retailers to shut down,” says Popal. “Then there was the introduction of VAT in 2017, as well as a reduction in government subsidies and the implementation of dependent taxes – all of which caused a significant reduction in consumer disposable income. These factors and the overall lack of innovation in the smartphone space have led to a lengthening of the refresh cycle. Indeed, consumers are becoming smarter, carefully analyzing the cost versus features of all new devices, and simply do not see the need to upgrade their devices as often as before.”

The trend in Nigeria is expected to improve this year, with the successful conclusion of the general elections and the expected stabilization of the economy. However, companies are holding their breath for signs of stability which will determine shipment trend in the country and region.

International Data Corporation (IDC), founded in 1964, is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC’s analysis and insight help IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives.

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