BMI View: We downgraded the forecast for Poland's consumer electronics market in 2015 to reflect our in-house Country Risk team's bearish view for zloty performance against the US dollar, which will see household purchasing power eroded. From 2016 , we expect the mark et to return to growth, driven by underl y ing income growth and the popularity of product categories including smartphones and tablets. Meanwhile, in terms of electronics production, t he domestic scene has a number of strong local players able to create affordable products for the Polish market. Our core scenario is for continued growth in consumer electronics spending, as we forecast a CAGR of 1.2 % over 2015-2019 , with growth over 2016-2019 offset by the decline in 2015 .
Headline Expenditure Projections :
Computer Hardware Sales: USD3.86bn in 2014 to USD3.29bn in 2015, -14.6% in US dollar terms. After a contraction in 2015 derived from product cycles and economic conditions, we expect the market to return to a stronger growth trajectory from 2016.
AV Sales: USD2.42bn in 2014 to USD2.09bn in 2015, -13.9% in US dollar terms. Big-ticket TV set demand will be hit by zloty depreciation, while further digital camera volume cannibalisation expected in 2015 before stabilisation in the latter years of our forecast.
Handset S ales: USD3.28bn in 2014 to USD3.34bn in 2015, +1.9% in US dollar terms. Only segment forecast to grow in US dollar terms in 2015 as deepening smartphone ownership continues to drive value increases.
Key Trends And Developments : BMI expects zloty depreciation will exacerbate unfavourable product trends in the computer hardware market in 2015. Enterprise upgrade demand was brought forward to 2014 by the withdrawal of Microsoft support for the XP operating system in April, while tablet volumes were already forecast to decline in 2015 after a rapid diffusion of ownership among the core user group and a lengthening of replacement cycles in 2014. This trend will mean Poland's handset market will again outperform the other consumer electronics market segments in 2015 and be the only segment to register US dollar denominated growth in 2015 - albeit with a marked slowdown from 2014. We expect the performance gap between the PC and AV markets and the handset segment will widen in 2015 despite the slowdown, with handset demand expected to fare better due to the lower average selling price of handsets, operator promotions and the greater necessity for handset ownership.
The tablet market exhibited strong growth in Poland from 2012-2014, surpassing volume sales of notebooks to become the largest device category in the PC market, but as noted above is forecast to contract in 2015. Unlike in Western European markets, where Apple's iPad dominates both in terms of installed base and sales, in Poland the market is more diverse. Browsing traffic data indicate Apple had a narrow lead over Samsung in terms of installed base in November 2014, but that the latter was on course to overtake it in early 2015. Other vendors with strong performance in the tablet market in 2014 included cost-conscious brands such as Lenovo, ASUS and Acer. BMI expects Lenovo and other Android partner vendors will outperform again in 2015, but an additional dynamic worthy of note will be the competition from low-cost notebooks (sub-USD250) after Microsoft's cut to operating system licensing fees on low-end devices in 2014, which could eat into the tablet market.