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BMI projects that the South African consumer electronics market will continue to offer opportunities in
2013, with estimated growth of 11.4%. The latest data on retail sales and credit extended to private
households suggest that the consumer remains in decent shape in spite of indebtedness: retail sales grew
by 8.3% year-on-year (y-o-y) in June, and credit rose by 7.7% y-o-y in the same month. Combined with
relatively low inflation and low interest rates, customers are spending on bigger ticket items such as PCs
and notebooks, thereby boosting the market. While we acknowledge various vulnerabilities such as high
personal debt levels, adverse weakness in the housing market and subdued levels of private sector credit
extension, in our view a number of factors bode well for consumer spending. The relative buoyancy of the
retail sector was evident in 2012 as retailers reported strong sales of large-screen TV sets, with models in
the ZAR9,000 range proving popular. Overall we hold to our wider view that the consumer electronics
market will continue to enjoy a revival in 2013.
Headline Expenditure Projections
Computer hardware sales: US$5.4bn in 2012 to US$6.1bn in 2013, +12% in US dollar terms. Forecast
in US dollar terms downwardly revised due to analyst adjustment but migrations to Windows 8 should
provide a boost in 2013.
AV sales: US$1.4bn in 2012 to US$1.6bn in 2013, +9% in US dollar terms. Forecast in US dollar terms
unchanged, with flat-screen TV sets expected to provide the most dynamic development.
Handset sales: US$2.1bn in 2012 to US$2.3bn in 2013, +13% in US dollar terms. Forecast in US dollar
terms unchanged, with smartphones the main revenue growth driver.
South Africa's score was 54 out of 100, unchanged from the previous quarter, earning it 6th place in our
MEA CE RRR table. We expect 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 to roll 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.
South Africa continues to lag not only in terms of its own previous targets for digital
migration, but also other countries in Africa have surpassed it in the switchover from
analogue to digital broadcasting. The October 2012 date for the switch-on seemed was
missed. With only two years left until South Africa's deadline for digital broadcasting
migration, this should be a driver for sales. Vendors will focus on high-growth, new product
categories such as internet-enabled TV sets and 3D TV.
Increasing smartphone adoption is a key element of South African mobile operator strategy,
and BMI expects sales of around 12.4mn units by 2016. Various applications and content
will drive demand for higher-tier handsets. Around 4mn of South Africa's 10.5mn data
users are understood to be using fully featured smartphones, according to operator estimates.