Poland Consumer Electronics Report Q2 2014
Headline Expenditure Projections
- Computer Hardware Sales: US$3.8bn in 2013 to US$3.7bn in 2014, -2.9% in US dollar terms. Unit growth is strong, but with consumers increasingly opting for low-cost sub-PLN600 tablets value growth is more subdued.
- Handset Sales: US$3.90bn in 2013 to US$3.93bn in 2014, +0.6% in US dollar terms. The market is forecast to exhibit slower growth in 2014 after the boom in smartphone volumes in 2012 and 2013, with price pressures in the Android ecosystem an additional squeeze on value growth.
- AV Sales: US$1.5bn in 2013to US$1.6bn in 2014, +5.2% in US dollar terms. Forecast in US dollar terms unchanged, with growth areas including HD TV, 3D and smart TV.
Key Trends & Developments
The smartphone market in Poland expanded rapidly in 2012 and 2013, with strong growth in volume and value terms. The availability of a wider variety of mid-range Android smartphones from 2012 was critical to a deepening of the market, and BMI expects continued competition in 2014 from Chinese Android vendors expanding internationally. Samsung Electronics and LG capitalised on market growth in 2012 and 2013, but we expect them to face stronger competition from Huawei, ZTE and Lenovo in 2014, which could affect their market shares and margins. One interesting feature of the Polish smartphone market is the popularity of Windows Phone handsets, where they reportedly enjoy a double-digit share of sales in the smartphone market.
The tablet market in Poland has been subject to similar trends as the smartphone market. The influx of lowcost tablets running Google's Android OS from OEMs saw sales boom in H212, a trend that accelerated in 2013. Sales of sub-PLN600 devices took just 13% of sales in Q112, when Apple's iPad dominated, but this share had exceeded 50% by the end of 2012. This has deepened the tablet market and pushed adoption rates far higher than when the market was dominated by Apple's iPad, which was out of the price range of the majority of Polish consumers. The gains for tablet vendors have, however, hit notebook sales hard, with IT distributor Action reporting a 27% y-o-y decline in PC shipments to Q213, an even steeper drop than that experienced in Western Europe. BMI believes this trend will continue, with Chinese producers benefiting as sales of cheap devices are supported by major retailers such as Biedronka and Carrefour.
Poland's consumer electronics market is expected to exhibit solid growth over the medium term, underpinned by a strong consumption story and demand growth in key device categories. There is, however, risk to the downside as a result of the deteriorating security situation in neighbouring Ukraine. However, our core scenario is for continued growth in consumer electronics spending, as we forecast a CAGR of 3.6% 2014-2018. We expect outperforming device categories will be smartphones, tablets and smart TV sets, driven by new technologies, consumers seeking choice and low prices offered by foreign and domestic chains. Meanwhile, we retain our bearish outlook for digital camera and notebook volumes in the short term, with these device categories under pressure from smartphone and tablet cannibalisation respectively.
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