Poor job security and the introduction of VAT suppresses market sentiment in Saudi Arabia and the UAE, the biggest markets
Shipments of mobile phones to the Gulf region declined significantly in the first quarter of 2018 following two quarters of back-to-back growth, according to the International Data Corporation (IDC).
The global technology research and consulting firm's Quarterly Mobile Phone Tracker showed that overall mobile shipments totaled 5.9 million units in Q1, down 9.9 percent quarter on quarter.
The decline stemmed from a 19.7 percent contraction in feature phone shipments, a reversal of the strong 23 percent year-on-year shipment growth seen in 2017.
Smartphone shipments were down 4.7 percent, with Q1 representing the fourth consecutive quarter of decline. Poor job security and the introduction of VAT suppressed market sentiment in the region's two biggest markets, the UAE and Saudi Arabia.
Total mobile shipments to these two markets declined 14.7 percent and 5.4 percent compared to Q4 2017, respectively.
Looking at smartphones in isolation, shipments to Saudi Arabia fell for the fourth consecutive quarter in Q1, contracting 7.5 percent.
"The size of the overall market in Saudi Arabia is expected to decline over the coming years as a direct result of the new expat dependent tax," said Kafil Merchant, a research analyst at IDC.
"A significant portion of the local population is expected to leave the country due to the introduction of this levy, with the exodus expected to run into the millions. The full impact remains to be felt, however, as many expatriates are waiting for the school year to end before leaving."
Smartphone shipments to the UAE were also down in Q1, falling 4.6 percent. "The UAE market is experiencing a significant shift in consumer spending as evidenced by the first-ever cancellation of the spring edition of GITEX Shopper, the largest bi-annual consumer electronics event in the country," said Nabila Popal, a senior research manager at IDC.
"The true impact of this shift can be seen in the independent retail stores of Deira, the traditional trading and commerce center of Dubai, where shops that were previously impossible to lease are now sitting vacant. Organized mall-based retail chains that focus exclusively on consumer electronics are also struggling."
The performance of the other GCC markets varied considerably in Q1, with Kuwait seeing a 3.9 percent decline in smartphone shipments, while Bahrain and Oman bucked the regional trend to post respective growth rates of 3.4 percent and 6 percent for the quarter.
Nokia continued to dominate the vendor landscape for feature phones, garnering a 87 percent share of the overall GCC market in Q1. On the smartphone front, Samsung maintained its lead with 35 percent share of the region's shipments, while Apple and Huawei ranked second and third.
Looking ahead, IDC said it expects overall mobile phone shipments to the GCC to decline 6.3 percent in 2018.For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.