South Africa Consumer Electronics Report Q3 2012

BMI projects that the South African consumer electronics market will moderate in 2012, with estimated growth of 6%. The relative buoyancy of the retail sector was evident in 2011, with major retailers enjoying brisk trade in the pre-Christmas period. Retailers reported strong sales of large-screen TV sets, with models in the ZAR9,000 range proving popular. Combined with relatively low inflation and low interest rates, customers are spending on bigger ticket items such as PCs and notebooks, thereby boosting the industry. While we acknowledge various vulnerabilities such as high personal debt levels, we hold to our wider view that the consumer electronics market will continue to grow in 2012.

Headline Expenditure Projections Computer hardware sales: US$5.1bn in 2011 to US$5.2bn in 2012. Forecast in US dollar terms downwardly revised due to macroeconomic factors and following a strong 2011, PC market growth is expected to slow in 2012.

AV sales: US$1.35bn in 2011 to US$1.45bn in 2012, +7% in US dollar terms. Forecast in US dollar terms downwardly revised due to macroeconomic factors, with flat-screen TV sets expected to provide the most dynamic development.

Handset sales: US$1.9bn in 2011 to US$2.1n in 2012, +12% in US dollar terms. Forecast in US dollar terms upwardly revised due to analyst modifications, with smartphones the main revenue growth driver.

Business Environment Rating: South Africa’s score was 54.1 out of 100, which earned it sixth place in our MEA CE BER table. The country had a CE Market score of 54.1BMI expects rising penetration of consumer electronics devices such as smartphones and flat-screen TV sets.

Key Trends & Developments

The South African Department of Education has announced a target of rolling out laptops to all schoolchildren in the country by 2014. The government is looking at various ways to achieve this, including the use of portable mobile computer labs for schools where there is no infrastructure. Following a strong recovery in PC shipments in 2011, the market should remain on an upwards trajectory.

With only two years left until South Africa’s deadline for digital broadcasting migration, this should be a driver for sales. The analogue broadcasting signal is scheduled to be turned off towards the end of 2013. Vendors will focus on high-growth new product categories such as internet-enabled TV sets and 3D TV.

Smartphone and PDA sales were estimated to have doubled in 2011, and BMI expects sales of around 12.4mn units by 2016. Various applications and content will drive demand for higher tier handsets. In its half-year 2011 results, local mobile operator Vodacom reported a 65% increase in the number of smartphone users. Around 4mn of South Africa’s 10.5mn data users are understood to be using fully featured smartphones, according to operator estimates.