Has the Apple iPhone 6 reshaped the UAE smartphone market?
The short and honest answer to that question is no. Despite the tremendous success of the phone, the iPhone 6 has not disrupted or reshaped the UAE market, and nor has the much-vaunted 6 Plus. Apple is held in high regard in the Middle East and many of the brand’s more vociferous proponents believed that its grand entrance into the world of large screen sizes would result in it dominating the market, or at least change market dynamics in a major way. However, as much as I may love my new iPhone 6 Plus, that simply hasn’t been the case.
In fact, it is Samsung that continues to dominate the UAE smartphone market, with IDC's Mobile Phone Tracker for the first quarter of 2015 showing a 37 per cent share for the South Korean vendor, with Apple second at 18 per cent. While the stories about Samsung's falling sales are true, it comfortably remains the market's dominant force in terms of volume shipments. The picture is much the same when considering the Middle East as a whole; despite suffering a drop of six percentage points from last year, Samsung continued to lead the region's smartphone market in the first quarter of 2015 with 41 per cent unit share, while Apple again placed second with 17 per cent. In value terms, however, the two smartphone giants are neck and neck in the Middle East, while Apple holds a five percentage point lead over its arch-rival here in the UAE.
So why is Apple not dominating the smartphone market despite its recent success? What many people fail to appreciate when considering the prevailing trends of the mobile technology market in the Middle East is the power of the masses. The iPhone caters to just one segment of the population – those who can afford phones priced over US$450. And that segment is limited in size, even in the UAE. No matter how incredible the phone becomes, it is likely to remain an unaffordable luxury to the majority of the population.
Ever take a ride on the Dubai Metro? Just count how many people you see using an iPhone; it won’t be many. The iPhone has not become a phone for the masses here as it has in countries like the United States, where telecom operators offer extremely aggressive subsidies that mean the devices can even be free to end users on certain plans. Unfortunately that is not the case here, and since 65 per cent of all the smartphone units sold in the UAE are priced below $450, it is what happens among the masses that is truly responsible for shaping the market’s dynamics.
Let me present the scenario in another way. The UAE smartphone market can be broadly divided into four groups of vendors. We have the big guns Apple and Samsung fighting at the top, followed by the rising mid-market players like Huawei and Lenovo. There are then vendors like HTC, LG, Nokia/Microsoft, Sony, and BlackBerry with 3 to 5 per cent share each, while the rest of the market is made up of various new entrants all fighting for 1 per cent share or less. The success of the Apple iPhone 6/6 Plus has not caused any vendors to shift from one group to another or changed any of the overall rankings. The four groups remain as they were, although the launch may have helped to prevent Apple's share from shrinking as people's preference for larger-screen devices increased. Indeed, Apple's market share actually increased slightly as high-end consumers who desire a larger screen size can now choose the vendor's products.
So if it’s not Apple or Samsung, who or what is reshaping the UAE smartphone market? Unexpectedly, this honour falls to the rising force of low-priced smartphones, and the list is endless; we have Wiko, Fly, Vsun, Asus, Obi, Oppo, Hisense, and various other Chinese vendors. The growth of these new brands has led them to capture a combined 12 per cent of the UAE smartphone market’s volume, up from just 4 per cent in last year’s first quarter. That said, it is not only the market’s newcomers contributing to the surging growth currently characterising the lower end of the market, with global players like Samsung, Huawei and Lenovo also recording a significant portion of their sales in the low-price segments.
To illustrate the drastic shift in market dynamics currently under way in the UAE, smartphones priced under $150 increased to command a 38 per cent share of the market’s volume in this year’s first quarter, up from just 21 per cent a year earlier. Shares for smartphones priced between $100 and $200 have doubled from 12 per cent to 24 per cent over the same period. Conversely, devices priced $450-plus have experienced a decline in share from 44 per cent in the first quarter of 2014 to 36 per cent in the corresponding quarter this year.
Whether it’s coming from well-known brands or not, it is this huge influx of ultra-cheap (and good quality) smartphones that is changing the market’s dynamics, not the launch of the Apple iPhone 6/6 Plus. The day Apple launches a sub-$200 smartphone is the day it will truly shake up the market, but whether that would be a good move for the vendor or not remains open to debate. For now, all we can do is wait and see, for tomorrow this constantly evolving market may be a different ball game altogether.
Nabila Popal is a research manager at IDC in the Middle East, Africa and Turkey.
Follow The National's Business section on Twitter