Peru Consumer Electronics Report Q3 2014
Headline Expenditure Projections
Computer Hardware Sales: USD762mn in 2013 to USD841mn in 2014, +10.4% in US dollar terms. Tablet sales are driving growth higher, but there remains growth potential in both the desktop and notebook markets despite the impact of cannibalisation.
AV Sales: USD912mn in 2013 to USD998mn in 2014, +9.4% in US dollar terms. Flat-screen TV sets expected to provide the most dynamic development.
Handset Sales: USD739mn in 2013 to USD774mn in 2014, +4.7% in US dollar terms. Smartphones are increasing as a share of device sales, boosting average selling price for the overall handset market, but intense price competition in the Android ecosystem is countering this effect in the smartphone market.
Key Trends & Developments
- Competition is intensifying in the smartphone market, which BMI expects to drive increases in penetration. As is the case for most Latin American markets, penetration rates trail comparative rates in Southeast Asian markets, but with Chinese Android vendors including Lenovo, Huawei and CoolPad shifting from China to an international focus we expect 2014 to see strong growth. Furthermore, the launch of Firefox OS in collaboration with Telefonica and ZTE, has seen the price of smarpthones drop to below USD100 and the improving quality of 3G internet access should create more demand.
- Price erosion is also likely to be a feature of the computer hardware market. In 2014, Peru's household PC segment will remain the main PC market driver due to a low household PC penetration rate, some distance behind that of Latin American neighbours such as Chile and Brazil. Again low-cost Android devices will play a key role in driving penetration higher, however with Microsoft announcing reduced OS licensing costs for low-end devices in Q114, price competition could intensify across the tablet, notebook and hybrid market. BMI believes lower-cost hybrid devices have the potential to reclaim device share from tablets in the short-to-medium term, particularly in emerging markets where a multifunctional use case is expected to hold sway in first-time buyer households.
- The start of digital terrestrial broadcasting is due to take place in 2014. The introduction of digital TV at the provincial level should stimulate demand for flat-screen TV sets in these markets. The first cities where digital TV services are expected to be available are Arequipa, Cusco, Trujillo, Piura, Chiclayo and Hancayo. Residents of Lima had access to eight additional TV channels by 2012.
A strong consumer growth story underpins our view that Peru will remain one of the more dynamic markets in Latin America over our forecast period. Economic growth is relatively broad-based compared to some other regional markets, boosting consumption of devices such as notebooks, tablets, smartphones and flat-screen TVs. However, in 2014 Peru continues to trail the majority of its regional peers in terms of device penetration rates in most consumer electronics device categories. This feature does have upside, allowing vendors to capitalise on strong growth if they are competitive on price. BMI forecasts consumer electronics sales to grow by 8.3% in 2014, backed by a rise in consumer spending and low penetration of devices such as PCs and smartphones. Meanwhile, the launch of 4G LTE by Movistar in January 2014 should boost sales of mobile handsets at the higher end of the market.
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