Weak oil prices and fewer tourists drag UAE PC sales down

Sunday, Aug 23, 2015

Dubai

Weak oil prices combined with fewer tourists from Russia and Europe dealt a major blow to second-quarter PC sales in the UAE, apart from the growing popularity of tablets and smartphones, according to an industry expert.

The emirates saw a year-on-year 16.8 per cent fall in shipments to 331,704 units in the second quarter of this year.

Desktop shipments fell by 23.4 per cent and laptops by 14.6 per cent.

Fouad R. Charakla, research manager at International Data Corporation (IDC), told Gulf News that the shortfall of Russian tourists, due to weak rouble, had a negative impact. The PC inventory pile-ups from the previous [first] quarter also caused the market to decline faster.

According to Abu Dhabi Tourism & Culture Authority (TCA Abu Dhabi), there was a fall of 10 per cent in Russia tourists in the city in the first half of this year and payment solutions firm Network International saw a 30 per cent fall in card spending among Russian tourists during Ramadan alone.

The weaker euro and rouble have reduced the number of visitors from the Eurozone and Russia.

The Russian rouble had lost around a half of its value since last year, hit by sanctions, along with falling oil prices, forcing many Russians to stay at home.

The weak oil prices are forcing many enterprises and government sectors to reduce their IT spending.

Charakla said that some users are not replacing their machines and are instead spending more on smartphones. Smartphones and tablets are providing low-cost alternatives for communication, social media usage, etc.

For the third quarter period ending on September 30, the PC market is expected to witness a year-on-year decline of 2.4 per cent in shipments to 371,061 units as the third quarter of last year was really bad.

However, the market value is expected to rise to $213.05 million (Dh782.50 million) in the third quarter compared to $188.43 million in the second quarter of this year.

“The market is expecting a growth of around 40,000 units compared to quarter on quarter mainly due to Gitex Shopper, which is to be held in October,” he said.

The growth is mainly coming from laptops as bargain hunters will be looking for best deals at Gitex where Windows 10 preloaded machines will also be available.

PC makers anticipate that Windows 10 will help ignite corporate and consumer demand that failed to materialise for its predecessor — Windows 8. They said that there are 600 million PCs that are four years old and are waiting to be replaced globally.

But industry experts don’t expect Microsoft’s new Windows 10 operating system to fuel new demand for the sagging sales.

Craig Stice, senior principal analyst, IHS Technology, said the days of a new operating system alone driving new PC demand or replacement are long gone, especially now that Microsoft is offering Windows 10 as a free upgrade. However, the hype around Windows 10, the “advertising and the marketing campaigns” will bring much needed attention to the PC consumers.

He said Windows 10 is a landing pad for the commercial markets, although these markets will typically take 12 to 18 months before a replacement, as they will wait to ensure all the bugs are worked out. Additionally, many commercial markets just went through a replacement last year following the Windows XP retirement.

Ranjit Atwal, research director at Gartner, said the release of Windows 10 is expected to contribute to a slowing enterprise demand in 2015.

However, he said that Windows 10 could boost replacements during 2016 as suppliers and buyers adjust to new prices.

The company’s Windows 8 OS did not revive the weak PC market and according to research firms, even with Windows 10 the global PC market is expected to decline close to five per cent this year.

For the whole year, the UAE PC market is expected to fall by 9.2 per cent to 1.62 million units compared to 1.47 million units in 2014.

By Naushad K Cherrayil Staff Reporter