BMI View: We have not made any big changes to our outlook this quarter following significant revisions to the Bulgarian consumer electronics market forecast in the Q115. Our assessment of the underlying growth dynamic is unchanged, with our expectation for short term challenges to act as a drag on growth, including economic weakness and regional political and security risks. Despite the challenges for vendors we expect growth in 2014 particularly for sales of smartphones, flat-panel TV sets and low-cost Android tablets. However, we consider the consumer electronics market in Bulgaria to have strong medium-term growth potential. Low penetration across most device categories will allow vendors to tap into the first-time buyer and upgrade/replacement markets as incomes rise and confidence returns among households.
Headline Expenditure Projections
Computer Sales: USD601mn in 2014 to USD561mn in 2015, a decline of 6.7%. The decline in sales of desktops and notebooks will continue as consumers substitute for cheaper tablets. Meanwhile economic weakness will continue to be a drag as households defer big-ticket purchases.
AV Sales: USD288mn in 2014 to USD280mn in 2015, a decline of 2.8%. After strong growth in 2014 with the FIFA World Cup in Brazil providing a boost to TV set sales, we expect a decline in 2015 as purchases are again deferred.
Handset Sales: USD792mn in 2014 to USD817mn in 2015, growth of 3.2%. The continued increase in smartphones as a share of total device sales will make handset sales the outperforming segment of the market, although growth will slow markedly from recent years.
Key Trends & Developments
In terms of tablet market share, it is devices running Google's Android OS that have taken a lead in Bulgaria due to the lower price points of devices from East Asian OEMs. The latest tablet browsing traffic data for Bulgaria from Statcounter show that Android accounted for 68.62% in December 2014, up by 13.8pps y-o-y. This is a sharp...