Russia Consumer Electronics Report Q2 2016
BMI View: Russian consumer electronics device spending collapsed in 2015 as the economic crisis resultedin a sharp decline in consumer sentiment - and device affordability due to extensive rouble depreciationthat eroded consumer purchasing power. The market is expected to contract again in 2016 as economicconditions continue to be hostile, but there will be some let-up from the depths of the crisis in 2015. Afterthis sharp downturn there is pent-up device demand across the market, but we have adopted a cautiousoutlook for a rebound over the medium term based on the weak household income outlook, whileuncertainty around Russian international relations holds the prospect for further disruption. There is someupside potential to offset this, if the government can kick start the expansion of domestic electronicsmanufacturing, including components, that would go some way towards alleviating the erosion inaffordability. Our core scenario is for device spending to increase at a CAGR of 5.6% over 2016-2020 andto remain far below previous highs in value and volume terms even by 2020.Latest Updates & Industry Developments
Computer Hardware: USD5.4n in 2016 to USD6.4bn in 2020, a compound annual growth rate (CAGR)of 4.3%. Pent-up demand from depth of the economic crisis in 2015-16 has potential to see spendingbounce back from 2017, but a subdued economic outlook means purchasing power will remain below2013 levels even in 2020, and consequently we believe lower volumes and greater share for low-costbrands will remain characteristic of the segment.• AV: USD3.7bn in 2016 to USD4.3bn in 2020, a CAGR of 4.2%. TV set upgrades based on smart, Ultra-HD and OLED technologies - along with a deceleration in digital camera volume cannibalisation - willreturn the market to growth. Potential for strong performance in 2018 when Russia hosts the FIFA WorldCup, which could be a powerful trigger for TV set upgrades.• Handsets: USD5.0bn in 2016 to USD6.8bn in 2020, a CAGR of 7.9%. After the market stalled in 2015and 2016 there remains potential for first-time smartphone upgrade purchases to drive outperformance ofthe handset segment once the economic environment improves.
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