Russia Consumer Electronics Report Q4 2013
Published by Business Monitor International
on Oct 10, 2013
, 70 pages
PDF - Download Now with 3 Quarterly Updates format - Download Now
We have downgraded our outlook for the Russian consumer electronics market due to weaker macroeconomic forecasts and the shift from notebooks to low-cost tablets in the PC market. We now expect total spending will increase by 6.9% in US dollar terms to US$27.1bn in 2013, still a robust rate of growth compared to much of the rest of the region. Over the medium term the Russian consumer electronics market is expected to increase at a compound annual growth rate of 7.1%, driven by the growing popularity of digital lifestyle products like smartphones, digital TV sets, tablets, digital cameras and hybrids/ultra-thin notebooks. The planned roll-out of digital TV broadcasting to 95% of Russian citizens by 2015 and investment in 3G and 4G mobile communications infrastructure will boost spending. The market should receive a further boost following WTO entry, confirmed in August 2012, with import taxes of 5-15% expected to be lowered within three years.
Headline Expenditure Projections
Computer Hardware Sales: US$10.4bn in 2012 to US$10.6bn in 2013, +3.1% in US dollar terms. The booming tablet market is sustaining growth in unit terms, however with consumers opting for low-cost devices value growth will trail increases in shipments.
AV Sales: US$8.2bn in 2012 to US$8.8bn in 2013, +6.7% in US dollar terms. Forecast in US dollar terms unchanged, with flat-screen TV set sales the main growth area.
Handset Sales: US$6.6bn in 2012 to US$7.5bn in 2013, +13.3% in US dollar terms. The increased adoption of smartphones is driving value growth in the market, and with a wider array of high-spec midrange Android handsets hitting the market we expect fast growth will continue even as smartphone penetration rises.
Russia's score is 54.9 out of 100.0, unchanged from the previous quarter. Russia moved into first place in our latest Consumer Electronics Risk/Reward Ratings, ahead of the Czech Republic and Turkey.
Key Trends And Developments
Sales of notebooks and desktops declined y-o-y to Q213, while tablet sales increased sharply. This transition meant total PC shipments continued to increase in Russia, however with a large share of tablet unit growth coming from low-cost US$100 devices there is a detrimental effect on market value. BMI expects tablets will continue to be a growth area as prices decline with the wider availability of high quality Android devices, primarily from Chinese and Indian OEMs. Vendors such as Apple and Samsung lead the Russian tablet market in 2013, as is the case globally; however growth is being driven by vendors such as Prestigio, Texet, Huawei and Acer, all of which have targeted low-cost market segments. One consequence of this trend is that notebook vendors that have failed to make a mark in the tablet market, such as HP and Dell, have been hit hard.
Another area of rapid change is the handset market where the share of sales from smartphones continues to rise rapidly. This is in contrast to the trend in the PC market, where consumers favour cheaper devices, as smartphones retail for higher prices than conventional handsets. Demand for smartphones and higher-end feature phones will help prevent stagnation in the handset market despite the slowing subscriber growth rate. As smartphone ownership has broadened, there is an opportunity for OEMs to capture market share among lower income consumers, with FLY the outperformer y-o-y to Q113, capturing 6% of smartphone sales, up 5.4pps y-o-y. This has seen Samsung's share of the smartphone market decline, and we expect it will come under further pressure from low-and-mid range Android vendors such as FLY, Huawei, LG, Lenovo and ZTE over the short-to medium term.