Dubai Chamber study forecasts a 6% growth for the audio visual devices market from 2013 to 2017

A recent Dubai Chamber of Commerce and Industry study released on the sidelines of Gitex 2013, revealed that the market for consumer electronics is likely to remain strong in the wake of lifestyle changes region-wide. 

The study, which is based on a Business Monitor International (BMI) report, further states that the prospects for the sector are likely to improve as the regional economies forecast a reasonable growth ratio as prevailing trends of converging technologies, growing population and incomes underpin the growth-dynamic for the foreseeable future. 

The role of Dubai in these growth dynamics further underlines the importance of major regional events like GITEX, it says. 

Meanwhile, Dubai’s trade in consumer electronics has grown from an estimated AED 24 billion in 2002, to AED 130 billion in 2011 while last year the emirate exported consumer electronics valued at approximately AED 55 billion which came from imports of AED 74 billion. 

The figures, which are based on latest Dubai Customs statistics, clearly indicate the growth witnessed by the off-stream sectors like consumer electronics unlike the conventional industries like tourism, hospitality, and retail, which goes on to emphasises the emirate’s role as information and communications technologies trade hub in the region.  

According to the study, Dubai’s exports are mostly destined to regional countries like Saudi Arabia, Iraq and Kuwait which are the top three trade partners representing AED 24 billion (over 50%) of consumer electronics exports thus showing strong growth in recent years. 

For example, consumer electronics exports to Saudi Arabia have increased at an average of 36% a year since 2008 while  exports to other GCC countries have also seen rises of at least 26% year-on-year and included Kuwait, while Qatar has shown a rise of up to 36% year-on-year in 2011 compared to the year 2010.  Still, Saudi Arabia dominated the export market which accounted for 26% of Dubai’s consumer electronics exports followed by Iraq (18%) and Kuwait (5.4%) in 2011. 

Dubai’s imports typically originate from China which is a leading supplier of hardware including computers and handsets.  Consumer electronics imports from China to Dubai were valued at approximately AED 34 billion in 2011 while video games supplies from the US and Japan are strong still they are not enough to impact the overall position of China as the importer of choice for the consumer electronics category. 

Over the last five years up to 2011, the study informs that each sub-category of consumer electronic has experienced strong volume growth of at least 14%, and in some cases up to 26% and despite the rise of smart-phones, the overall contribution of handset devices to consumer electronics imports remains stable at around 50%.

Anecdotal evidence, however, suggests that smart phone adoption is on the rise and consumers are likely to be funnelling more income into handsets than other devices. This is probably due to the diverse income classes to which handsets are sold as all buyers are not likely to have fourth generation networks in their respective countries.  

According to the BMI report, computer sales in the UAE were AED 6 billion in 2012 and are expected to reach AED 6.1 billion this year. Audio Visual and Gaming sales were AED 4.9 billion in 2011 compared to a forecast of AED 4.9 billion in 2012 compared to a forecast of AED 5.1 billion  this year.  

Sales of new flat-screen TVs are cited to be the main driver of growth for this category. Handset sales, meanwhile, are anticipated to increase the most, from AED 1.7 billion in 2012 to AED 1.9 billion in 2013 – an increase of approximately 10% over the year. 

Drivers for growth

According to BMI, around one-third of the emirates' computer users still use PCs based on Windows XP. In 2013, there has been a trend of upgrading hardware to support software. Traditional desktop and laptop computers, however, are seeing a migration to new operating systems such as Windows 8. 

On its part, the BMI report anticipates UAE computer hardware sales including PCs, notebooks and accessories to grow at 7% between 2012 and 2013 despite early reports that PC sales have been tapering off. 

The steady growth of fixed and mobile broadband penetration will also be a significant driver of demand for handsets as connectivity devices. BMI forecasts the UAE handset market to reach 3.8 million units in 2013, up slightly on the previous year while mobile subscriber penetration is forecast at 178.8% in 2013 and is expected to rise to 182.2% by 2017.

According to BMI, the UAE's AV devices market is projected to reach AED 5.1 billion in 2013 and is expected to grow at a CAGR of 6% in 2013-2017. The main driver will be new technologies and feature-rich lifestyle products, such as flat-panel TV sets, which are being regarded as necessities by consumers. 

The study informs that LED TVs were strong-selling product categories in 2012 after prices dropped by between 5% and 25% for various models. This year, vendors continue to focus on LED and 3D TVs, with some leading vendors following the promising launch of its HD TV service in the UAE by a triple-play service provider. Previous investments by service providers in fibre-optic cables to support high data capacity are now likely to deliver dividends.  

Arguably, the most important determinant for growth in the medium to long term is the lifestyle conscious nature of such products.  In the UAE, and the wider GCC, growth prospects for the sector are amplified partly because of the population dynamic of an emerging yet sizeable growing middle income class.  

According to Economist Intelligence Unit forecasts, the GCC population will reach 53 million by 2020. As incomes rise, spending on luxuries typically rises as consumers tend to become more lifestyle-focused. 

Another factor driving sales is the steady return of tourists that supports Dubai’s all-important carry-trade. An influx of tourists at the beginning of 2012 helped support sales growth. Traders also cite the good fortune of traditional festive seasons such as Eid in Dubai and Dubai Shopping Festival (DSF) as important. 

The GITEX technology week is the premier Middle East, Africa and South Asia (MEASA) event that hosts more than 139,000 ICT professionals from over 144 countries across the world. The exhibition represents a culmination of approximately 3,600 companies that represent more than 80% of the top industrial and consumer electronics brands.