IDC Reports a Slowdown in PC Shipments to the Middle East and Africa as Competition from Tablets Intensifies and Vendors Prepare for Release of 'Windows 8'
Dubai, October 21, 2012 – Despite GITEX Shopper, the Middle East region’s largest IT sales event, taking place towards the end of the third quarter, and the region’s largest IT exhibition, GITEX Technology Week, taking place this month, the Middle East and Africa PC market experienced a slowdown of 1.9% year on year in Q3 2012, according to preliminary results released today by International Data Corporation (IDC), the premier global market intelligence and advisory firm for the information technology and telecommunications markets. A total of 4.9 million PCs were shipped into the region during the quarter, with desktop shipments declining 8.8% year on year to total 1.9 million units, while notebook shipments increased 2.9% year on year to reach 3 million units.
“One of the primary reasons for the region-wide slowdown in Q3 2012 was the anticipated launch of the new Microsoft Windows 8 operating system," says Fouad Rafiq Charakla, a research manager at IDC Middle East, Africa, and Turkey. "This is expected during the final quarter of the year, and its imminent arrival has encouraged a number of vendors to minimize their inventory levels leading up to the launch of this new operating system. This factor, combined with the ongoing cannibalization of PC share by tablets, has hindered growth in the region's PC market."
The downturn was especially evident in the Egyptian PC market. "The lack of initiatives rolled out by the newly elected government, coupled with shrinking ICT budgets, were the major contributory factors to the slump in Egypt," says Victoria Mendes, an associate research analyst at IDC Middle East, Africa, and Turkey. "Major deals that were expected to bolster the education sector did not materialize, severely impacting PC demand for the quarter. Additionally, retail demand, a major component of PC consumption, was low as a result of the traditionally lean summer period."
Looking at the region's key markets, both Saudi Arabia and Turkey experienced a minor slowdown in shipments year on year. The summer season combined with the holy month of Ramadan to constrain PC demand in Saudi Arabia, while the weakening of the Turkish lira against the U.S. dollar restricted demand in Turkey. South Africa and the UAE managed only small growth year on year, with South Africa witnessing healthy uptake from commercial segments and GITEX helping the UAE market remain buoyant.
While this year's GITEX event in the UAE successfully attracted a large number of visitors from across the region, it did not witness a significant number of new product launches. In fact, the ‘Shopper’ event was mainly used as a platform by most vendors to liquidate existing inventory as they sought to clear room for higher volumes of devices with Windows 8 during the final quarter of this year. At the same time, IDC did not witness a significant decline in terms of pricing compared to earlier quarters of the year, although vendors and channels partnered to offer end users extremely attractive bundle offers on PC purchases. These offers included free gift vouchers as well other IT products and peripherals, such as printers and storage devices.
The event also saw a high volume of low-cost to mid-range tablets bundled with PC sales. In fact, certain power retailers at the event bundled each sale with a free tablet. According to Charakla, however, IDC does not believe these low-cost tablets are acting as substitutes for notebooks in fulfilling the computing needs of end users. "Only higher-priced tablets will cannibalize notebooks sales to a certain extent, prolonging the refreshment cycle for notebooks among end users in most cases," he says.
Despite suffering a drastic slowdown of 21.6% year on year, HP continued to dominate the Middle East and Africa regional PC market in Q3 2012. Efforts to reduce inventory levels within its channels led to this decline in the vendor's shipments, while a lack of aggression was responsible for second-placed Dell's 8.9% third-quarter downturn. After suffering a slowdown in the second quarter of 2012, Toshiba was able to recover in the third quarter, attaining growth of 17.1% year on year to climb to third place. In a continuation from the previous quarter, Lenovo experienced the highest rate of growth among the leading vendors in Q3 2012, increasing its shipments 44.5% year on year. The vendor’s aggressive pricing strategies and growing workforce in the region contributed towards this high growth as it maintained its number-four position in the market. Taiwanese vendor Acer dropped to number five despite posting an 8.9% year-on-year increase in its shipments.