Egypt Information Technology Report Q4 2013
Published by Business Monitor International
on Sep 23, 2013
, 98 pages
PDF - Download Now with 3 Quarterly Updates format - Download Now
As Egypt's challenging economic environment continues to affect Egypt's consumer electronic market, we expect it to contract by 0.1% in US dollar terms in 2013, but then grow strongly over the medium term. The contraction in 2013 is the result of tightening of credit availability and a depreciation of the local currency, making imported products more expensive. We believe the effect will be strongest for bigger ticket items including TVs and PCs, while handsets will be the only segment to register growth in 2013. Looking further ahead to 2014 and 2015, we expect strong growth across the three consumer electronics segments due to positive fundamentals boosted by deferred purchases from 2013. A number of positive trends will be behind this growth, including accelerating economic growth and the declining price of laptops and tablets, which will tap into the low penetration rate. Handset vendors are increasingly bringing featurephones and smartphones with attractive features to price points that appeal to the mass market in Egypt. Both these trends will be in force over the medium term.
Headline Expenditure Projections
Computer Hardware Sales: US$834mn in 2012 to US$775mn in 2013, -7.1% in US dollar terms. Lack of credit availability and currency depreciation will squeeze sales as price sensitive consumers defer purchases. Over the medium term, the computer market remains fundamentally strong with low PC penetration, and falling unit prices.
AV Sales: US$377mn in 2012 to US$374mn in 2013, -0.7% in US dollar terms. Flat-screen TV sets the main driver of growth, but sales will be hit by lack of credit and currency depreciation, making imports more expensive.
Handset Sales: US$2.3bn in 2012 to US$2.4bn in 2013, +2.6% in US dollar terms. Only market segment forecast to grow in US dollar terms in 2013. The lower average price of handsets, credit from operators and higher volume nature of the market will keep growth in positive territory as aggressive promotions and Chinese imports maintain the affordability of devices.
Egypt's score is 38.2 out of 100, which places it last at 10th in our latest MEA CE RRR table. BMI expects Egypt to attain a higher ranking over time due to the growth potential of its market, particularly in regions outside Cairo, where distribution and retail infrastructures are currently underdeveloped. However, in the short term, economic conditions will keep it at the bottom of the table.
Key Trends And Developments
The mobile handset segment is the most dynamic consumer electronics market, and the only one expected to grow in US dollar terms in 2013. It has huge potential over the medium term, as consumers increasingly look to buy featurephones and smartphones, making it a focus for vendors. Nokia has been the market leader for many years, but has come under increasing pressure from Samsung, both in terms of smartphones and featurephones. Samsung stated that in 2012 it achieved more than 50% share of the smartphone market by units (and 60% by monetary value) in Egypt, up from 30% in 2011. It also estimated a 40% share of the entire market in terms of units sold. Both these vendors released new mid-range smartphones/featurephones in H113 to tap into demand for mobile internet, multimedia and apps.
The computer hardware and AV market is less buoyant, with credit tightening and currency depreciation hitting sales of these bigger ticket items. Over the medium term, flat-screen TV sets are expected to be the main driver of Egyptian AV revenue growth as consumers upgrade and trade in their old models for digital. This opportunity has attracted Samsung to build its first MENA factory in Beni Suef, 100km south of Cairo, which builds flat-screen TVs and computer monitors - two of Samsung's strongest-performing products in the region. A total of EGP1.7bn (US$280mn) was reportedly invested in the facility, which began production in September 2013.
Tablets will account for an increasing share of PC sales over the medium term, driven by demand from the retail segment and a government educational initiatives. In June 2013, Banha Electronics unveiled the first Egyptian manufactured tablet to the MCIT under the government's tablet for education programme. Banha Electronics released a first batch of 10,000 tablets at the end of June 2013, which was to be distributed to university students at affordable prices.