Sanctions against Iran could hit local PC market

Gulf News

Dubai: After a healthy run in the second quarter, the local PC market could be in for an indifferent second half brought on by the sanctions against Iran.

"The big question mark in the minds of the retailers is the trade between UAE and Iran," said Omar Shihab, research manager for PCs and systems at IDC Middle East and Africa.

"If the UAE brings sanctions into effect, then re-exports of PCs from the UAE, which stand at around 35 per cent, are going to take a big hit."

"The extended summer season has definitely impacted the third quarter. Customers are very cautious post-crisis and lack extended credit. So retailers got aggressive on sales to clear their stocks by offering promotions

"And with all the talks of the US entering into a second recession, customers are cautious and the signs are not that good."

Minor revision

PC shipments in the third quarter, after a minor revision, are expected to be 1.35 million units, a gain of 10 per cent compared with 1.23 million for the corresponding period last year. Their combined value would be $1.06 billion, up from $992.12 million last year.

Desktop shipments are expected to rise 16.51 per cent to 221,870 units from 190,428 units in the same period last year. Growth in notebook shipments would be a more marginal 7.77 per cent to 168,789 units compared to the 156,619 units in the third quarter of 2009.

Meanwhile, in the second quarter, continuing demand for portable PCs ensured a robust round of growth.

Shipments of PCs across all forms stood at 1.24 million units, more than 22 per cent over the 1.01 million units in the second quarter of last year.

Value-wise, it was up 11 per cent to $944.90 million from $848.27 million.

"The second quarter performance was a continuation of the strong first quarter with strong demand coming from home consumers coupled with the new Intel chips and Microsoft Windows 7 operating system," Shihab said.

Notebooks recorded the fastest growth, with shipments touching a 25 per cent year-on-year increase to 868,995 units from 694,968 units.

‘Intense competition'

" Consumers' demand for portables remained very strong, driven by an extensive product offering, while intense competition between the players maintained price points at very aggressive levels," Shihab added.

The UAE was the biggest market for notebooks with 378,548 units, an increase of 50 per cent year-on-year, followed by Qatar with 38,221 units, Saudi Arabia with 385,702, Bahrain (14,181) and Oman (12,263). Kuwait registered a negative growth of 6 per cent to total 40,080 units.

Desktops contributed around 17.67 per cent of total PC sales, while notebooks made up an overwhelming 70.11 per cent and the rest were accounted for by netbooks.

Desktops registered 18.62 per cent year-on-year growth to 219,073 units from 184,671 units, with a 10.83 per cent increase in market value to $149.19 million.

In desktops, Saudi Arabia was the leader with 100,483 units and a 31 per cent gain, followed by Oman (10,281 units), Kuwait (19,411 units), and the UAE (74,195). Bahrain and Qatar turned negative with drops of 21 and 9 per cent respectively to total 3,925 and 10,778 units.

In netbooks, Bahrain was the leader with 4,630 units, registering a year-on-year growth of 49 per cent.

Oman came second with 3,912 units, and was followed by Saudi Arabia (58,726) and the UAE (66,931).

Kuwait was down 12 per cent to 7,097 units, as did Qatar, down by 5 per cent to 10,261 units.

Gulf awaits netbook love affair

Netbooks are yet to capture the popular imagination in the Gulf.

"A lot of users were disappointed with their first purchases, they were complaining the screen and keyboard were too small, and that there was no drive," said Omar Shihab of IDC Middle East and Africa.

Total netbook shipments in the second quarter stood at 151,557 units, a gain of 14.29 per cent, though in value terms it came to less than 1 per cent to $59.77 million (Dh219 million).

"Netbooks are only secondary notebooks which are used only for surfing the net, quick emails and chat," Shihab said. "Now, a lot of users are thinking that by paying a little more they can get Dual Core or Core 2 Duo chips.

"At the same time, vendors are offering huge discounts on the lower-end PCs.

"Telcos still want to offer this as a product to attract more customers, and they will continue to source it from the vendors.

"But netbooks are not going to disappear out of the market. In the PC market, the dynamics are changing — you can see three categories of mobility.

"First is the notebook, which is used for productivity. The emergence of the second category, the Ipad, makes it more mobile. Third, you have the ultra mobile, which is the smartphone."