Boston, MA -- (SBWIRE) -- 05/30/2014 -- Downside risk derived from a reliance on external financing and domestic political instability continues to present short-term downside to an otherwise positive outlook for the Turkish consumer electronics market. Economic instability, including domestic access to credit, and the potential for the deteriorating security situation in neighbouring countries to spill over into Turkey could undermine the domestic political environment and growth story. However, our core scenario remains unchanged, as we forecast rising incomes, development of retail and networking infrastructure and declining device prices in key categories to drive strong medium-term spending growth. Key areas of spending growth include smartphones, tablets and smart TVs.
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Headline Expenditure Projections
Computer Hardware Sales: USD5.4bn in 2013 to USD4.9bn in 2014, -9.2% in US dollar terms. The PC market is forecast to be hit by depreciation of the lira, as well as declining demand for desktops and notebooks.
AV Sales: USD2.1bn in 2013 to USD2.2bn in 2014, +7% in US dollar terms. Forecast in US dollar terms unchanged, with sales dominated by TV replacements/upgrades, and smart TVs expected to outperform. Handset Sales: USD5.0bn in 2013 to USD5.2bn in 2014, +3.3% in US dollar terms. Smartphone penetration will continue to rise, but as market saturation approaches and price competition intensifies, increases in market value will be relatively subdued.
Key Trends & Developments
- The prospect of political risk factors becoming a drag on consumer electronics growth was raised when in March 2014 the telecoms authority of Turkey, TIB, banned the streaming video-sharing website YouTube, a day after an Ankara court ordered TIB to lift the ban on social networking website Twitter. The action was taken after an audio recording of what seemed to be a leaked conversation among Turkish officials regarding possible military operations in Syria was posted on the website. Although the fact the bans were revoked by the judiciary bodes well, BMI believe economic vulnerability, political instability and the regional security situation could all potentially derail the growth story.
- The fastest area of growth in Turkey has been the smartphone market. Sales in 2013 were estimated at 14.5mn units - making it the first year in which smartphone sales exceeded traditional handsets in unit terms. The boom has occurred as a result of the deepening market as East Asian vendors have competed aggressively on price, bringing them into line with the mass market consumer in Turkey. BMI expects another strong year of growth in 2014, with device prices continuing to decline as vendors such as Xiaomi enter the market.
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