29 Feb 2016

Dubai – Shipments of mobile handsets grew just 1% in the Middle East during the final quarter of 2015, according to the latest figures released by International Data Corporation (IDC). Totaling 30.04 million units, the flat quarter-on-quarter growth in Q4 2015 marks a significant slowdown from the previous quarter, when shipments were up 4.4% over Q2 2015, and IDC expects this trend to continue amid challenging market conditions across the region.

"The prevailing sentiment is that 2016 will see a slowdown in the growth of mobile handset shipments due to various socioeconomic factors such as low oil prices, reduced government spending, and ongoing political instability," says Nabila Popal, research manager for mobile handsets at IDC Middle East, Africa, and Turkey. "These factors have combined to significantly impact consumer spending across the region, and it is this segment of the market that is traditionally the driving force behind demand for mobile devices. As such, we are seeing vendors and channels brace themselves for a tough year ahead."

The market's minimal growth in Q4 2015 was spearheaded by Turkey, the UAE, and Kuwait, which saw shipments increase 12.7%, 7.2%, and 3.1%, respectively, when compared with the previous quarter. However, the relatively strong performance of these three countries, which combined to account for over 20% of the region's mobile shipments in Q4 2015, was not enough to drag the overall market growth rate into more positive territory. This was due to the rest of the region experiencing extremely flat growth – and even declines in the case of Saudi Arabia, Oman, and Bahrain – when compared with the previous quarter.

The share of smartphones continues to rise, with the devices making up 65.9% of all mobile phones shipped in the Middle East in Q4 2015. Declining average sales prices (ASPs) are the major factor driving this shift, as more and more first-time users are being enticed over to the smartphone segment. This trend is particularly noticeable with Android devices, whose ASPs fell by almost 16% year on year in Q4 2015 – a factor that undoubtedly helps Google to dominate the Middle East's operating system landscape.

Indeed, with 83% share, Android continued to rule the region's operating system roost in Q4 2015, despite Apple's iOS enjoying 50% quarter-on-quarter growth courtesy of the new iPhone 6s and iPhone 6s Plus devices. Together, these two giants control 99% of the region's smartphone market and IDC doesn't anticipate any challenge to this dominance in the foreseeable future.

"A number of smaller operating systems have tried to break into this space, but they will likely bow out of the battle sooner rather than later," says Saad Elkhadem, a research analyst for mobile handsets at IDC Middle East, Africa, and Turkey. "This is because they simply cannot continue to compete with the ever-expanding range of Android devices being sold at ever-decreasing prices, while the extensive ecosystems offered by both iOS and Android are another obstacle that is proving impossible to overcome."

IDC expects overall Middle East mobile shipments to cross the 120 million mark in 2016, with smartphone shipments making up 75% of the total. This will represent year-on-year growth of just 3.3%, down from the 7.3% growth seen in 2015.