BMI View: T he Hong Kong market is lucrative for vendors due to h igh incomes and a tech literate population , but due to the maturity of the market with high penetration rates even in relatively new device categories such as tablets and smartphones, growth opportunities are limited. S pending growth on consumer electronics devices slowed 2012 and 2013 due to a combination of a weaker economic environment, price erosion and high penetration of devices in key markets , and demand contracted in 2014 due to a decline in tablet volumes and a far smaller contribution from smartphone sales to overall growth compared to previous years . This is a relatively unique set of market trends, with Hong Kong one of the first global markets to reach tablet and smartphone maturity, and could represent challenges for vendors in other markets in 2015 and beyond.
Headline Expenditure Projections
Computer Hardware Sales: USD1.59bn in 2014 to USD1.65bn in 2015, up 3.9%. Stabilisation of tablet volumes after decline in 2014 will enable the overall market to return to growth.
AV Sales: USD1.09bn in 2014 to USD1.11bn in 2015, up 1.3%. After a contraction 2013-2014 due to digital camera cannibalisation by smartphones, as well as price erosion in the TV market, we expect a return to growth as volumes stabilise.
Handset Sales: USD2.41bn in 2014 to USD2.44bn in 2015, up 1.2%. The market is highly lucrative due to high smartphone average selling price and short replacement cycles, but with smartphone penetration of 71% at YE14 first-time buyer growth opportunities are severely diminished.
Key Trends & Developments
Due to its early adopter status the trend in the Hong Kong tablet market is important as it is instructive for dynamics in other regional and global markets. BMI estimates tablet volumes declined by over 25% in 2014, the second successive year of volume decline, due to saturation of the core user group. Tablet penetration reached an estimated 42.8% at YE14 in Hong...