New Report Available: Philippines Consumer Electronics Report Q2 2013

BMI View: BMI expects the Philippines IT market will grow by around 10% in 2013. Despite an uncertain economic outlook, consumer electronics spending is likely to remain fairly strong in the coming quarters, with government spending providing a stimulus. We have revised upwards our full-year 2013 consumer electronics growth outlook from 8% to 10%% as a result of the sector's stronger-than-expected performance in H112. Given the Philippines' low PC penetration, many provincial markets are relatively untapped territories, while rural populations contain the largest number of potential first-time mobile handset purchasers. Vendors will seek profit from product innovation such as smartphones based on the Android operating system, and 3D and LED TV sets.

Headline Expenditure Projections

Computer Sales: US$2.2bn in 2012 to US$2.4bn in 2013, +10% in US dollar terms. Forecast in US dollar terms unchanged following strong double-digit growth in H112.

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AV Sales: US$777mn in 2012 to US$848mn in 2013, 7% in US dollar terms. Forecast in US dollar terms is upwardly revised, with the main driver being demand for flat-screen TV sets.

Handset Sales: US$1.9bn in 2012 to US$2.0bn in 2013, +4% in US dollar terms. Forecast in US dollar terms upwardly revised due to analyst modification with the Philippines seen as a high regional growth market for smartphones.

Risk/Reward Ratings: The Philippine's score was 47.9 out of 100.0. The country takes 11th place in our latest RRR table, but has potential to rise over time due to rising device penetration.

Key Trends & Developments

Demand from outside Manila will continue to drive market expansion. More vendors are signing up new distributors and opening stores nationwide. Cebu is seen as a gateway to provinces in Visayas and Mindanao. Meanwhile, PCs for schools programmes will be another driver for the Philippines computer market.

As around one-third of the Philippine population still use analogue sets, there is plenty of continued growth potential in digital TV sets. The Philippines also lags many other Asian countries in adoption of digital TV.

The Philippines has around 9mn TV households and, despite the popularity of mobile handsets and other portable media devices, TV remains the platform by which Filipinos access news and entertainment.

Penetration of LCD TV sets is currently less than 1% of the population, but is expected to reach 4-5% within the forecast period.

Because of the orientation of Filipinos towards social networking in the mobile space, the Philippines is regarded as a promising market for smartphones. In H112 annualised growth in smartphone reached doubledigit growth territory, and smartphones comprised around 30% of handset sales - a share that is expected to rise.

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