BMI View: T he Serbian consumer electronics market is one of the least lucrative in per capita terms in the region, but the low penetration rate in key device categories has nonetheless attracted global vendors. Growth rates will remain moderate over the medium term due to the challenging economic environment and continued negative GDP growth in 2015 will weigh heavily on this sector. We forecast Serbian consumer electronics spending will grow just 0.6 % in US dollar terms in 201 5 to USD1.2 5 bn, and reach USD1. 44 bn in 2019. There is however upside potential for Serbia consumer electronics growth if the economic recovery is faster than expected - which would unlock demand from low penetration rates. Household PC penetration, despite more than doubling over the previous five years, remains 30 pp below the regional average , while smartphone penetration remains a long way below the regional average . We expect it to rise rapidly over our forecast period.
Headline Expenditure Projections:
Computer Hardware Sales: USD394mn in 2014 to USD366mn in 2015; -7.1% in US dollar terms. Low device penetration rates offer faster volume growth rates than elsewhere in Europe; however, weak economic conditions and a shift in consumption to cheaper tablets will limit value growth.
AV Sales : USD372bn in 2014 to USD395mn in 2015; +6.2% in US dollar terms. Continuing from the strong growth rates reported in 2014.
Handset Sales : USD384mn in 2014 to USD404mn in 2015; +5.2% in US dollar terms. The handset market is the most dynamic segment of the consumer electronics market as affordable smartphones drive growth, pushing up the average selling price for handsets.
Key Trends And Developments
In February 2014, global leader in the premium hardware segment for notebooks and tablets Apple announced the opening of an Apple Premium Reseller store in the capital of Belgrade. The store in the Delta City Shopping Centre will offer the full range of Apple products including Mac desktops and notebooks, monitors, iPads, iPhones and iPods. The store opening signifies the opportunity in the Serbian consumer electronics market, where device penetration rates remain below the regional average for notebooks, smartphones and tablets. However, in the short-to-medium term, BMI expects value growth will remain subdued due to the challenging economic environment. One area that could exceed expectations is the notebook category, with demand in 2014 expected to be boosted by the withdrawal of Microsoft support for the XP operating system (OS), and its decision to cut OS licensing fees on low-cost devices to make them more price-competitive versus tablets.
The Serbian smartphone market trails its peers in the region due to a combination of factors including the weak economy and a lack of competition in the telecoms sector. However, the smartphone market has still boomed as low-priced smartphone models have catalysed increases in market value even as total handset volumes have stagnated. The primary driver of this trend has been global handset and smartphone market leader Samsung Electronics. Looking ahead, the trend is expected to continue in the short-to-medium term as East Asian Android partner vendors target the Serbian market. In October 2014, Apple announced it would launch its iPhone 6 and iPhone 6 Plus in Serbia.