X marks the spot for iPhone sales boom
But there are doubts about how long surge can last
LONDON: Retailers and analysts are expecting sales of the new iPhone X and 8 to match the considerable pre-release hype when the the latest models are available for preorder in the Gulf from Oct. 27.
The sight of thousands of Apple-obsessed fans working themselves up into a frenzy and lining up around the block in order to get their hands on the latest iPhone is nothing new; the annual iPhone launch is as much a date in some people’s calendars as their birthday.
Analysts, however, are expecting sales of the iPhone X, Apple’s 10th anniversary model, and iPhone 8, launched amid the usual fanfare on Tuesday, to buck the trend of a recent fall in sales.
“We are expecting to see a growth this year over sales in 2016. Last year’s sales were down against 2015,” Anshul Gupta, research director of Gartner, a research and advisory company, told Arab News.
“We see this growth as being down to sales of the new iPhone 10 and 8, not least because sales of the iPhone in the first half of the year were down on the first half of 2016.”
For Gupta, the lower sales earlier this year and expected rise in sales during the second half of 2017 can be explained by fans being prepared to wait for the iPhone X rather than upgrade to the iPhone 7, which was released a year ago.
“There were rumors in the market about what the new features were going to be, and people knew there was going to be a 10th anniversary model,” Gupta said.
“So they waited for the significant upgrade. Pent-up expectations were building ahead of the launch and we anticipate this will lead to better second-half sales.”
That view was echoed by Nilesh Khalklho, CEO of Sharaf DG, who claims the excitement caused by the new models is twofold. First, the idea that the iPhone X is a significant departure from the previous models, and second, because customers in the UAE always love Apple devices.
“The new iPhone X is the all-new premium launch which has some amazing new features. We see this being a big draw for UAE residents who always like to go for the latest, cutting edge devices,” Khalklho said.
“The iPhone has been one of the most popular phones in the UAE for many years now.”
However, one analyst, while expecting strong sales of the latest iPhones, is predicting tough times for Apple beyond this latest launch.
Other than the wireless charging, the allscreen design and supposed longer battery life, the one common thing remarked upon about the iPhone 10 is the price: An eye-watering, gulp-inducing $999-plus.
For Brand Finance CEO, David Haigh, that could prove to be the iPhone’s undoing looking beyond last-quarter sales.
“Thanks to the new launch, the coming months will probably bring a surge in Apple’s sales, but the brand is going to struggle to retain its position in the long run,” Haigh told Arab News.
“Apple products remain status symbols in the Gulf. There is no doubt that many early adopters in the region will book their delivery of the new iPhone X or Apple Watch as soon as they become available.
“However, with the advent of cheaper handsets from brands like Huawei, whose success is particularly fueled by growth in emerging markets
SAUDI Arabia has some pretty big ambitions in the financial sector. The largest initial public offering (IPO) in history is progressing as Saudi Aramco gets ready for the market next year; the $200 billion privatization drive is also moving ahead under the revamped National Transformation Program.
So why is Riyadh, capital of the Kingdom, not capitalizing on the unprecedented surge in financial activity underway there?
In Abu Dhabi earlier this week (and simultaneously in China) the twice-annual Global Financial Centers Index (GFCI) was unveiled to an expectant audience of bankers, regulators and other professionals in the money-making world. The GFCI is increasingly viewed as an important indicator of the respective strengths of the cities that are aiming for “financial hub” status.
There were few surprises at the top. London, New York, Hong Kong, Singapore and Tokyo have occupied the top five slots for a long time, with occasional jockeying for position among the leaders. Hong Kong and Singapore, for example, swapped places this time in the third and fourth slots.
Elsewhere, in the top rung, European centers like Frankfurt and Dublin jumped up the charts as potential gainers from any loss of business in post-Brexit London. In North America, San Francisco and Boston (though not New York) fell back on fears of the Trump administration’s protectionist trade policies. In Asia, Shanghai and Beijing climbed as a result of the ongoing eastward “tilt” of the global economy.
The point is that macroeconomic trends and policies had a very definite effect on the financial centers’ performances in the index. Except in Saudi Arabia, it seemed. The momentous changes going on in the Kingdom barely affected Riyadh’s performance in the league.
The Saudi capital fell one place to 77 out of 92 global centers, though it improved its GFCI rating — a measure of the quality of its financial offering calculated by the compilers according to measurable factors like business environment, human capital and reputation — by some 22 points to 596.
But Riyadh was still ranked at the bottom of the nine centers from the Middle East and Africa that made it into the full list. It is ranked below Bahrain and Casablanca in the MENA region, and even below Mauritius in the global tables.
Below Mauritius? The Indian ocean islands with a combined population of about 1.4 million and gross domestic product (GDP) of $23 billion scored better in the rankings — at 69 — than Saudi Arabia, with its population of 32 million and a GDP of $646 billion. Of course, Mauritius has strengths, notably in the offshore industry such as the Middle East, Apple’s increasing focus on what are effectively luxury products may ultimately cost the brand a large share of the mass market.
“Brand value depends on the topline figures and if Apple fails to boost revenues in key markets such as the Gulf, its brand value will continue to fall.”
But while Apple may need to worry about the long term due its pricing structure, Kutaiba Edrees, store manager at iStyle in Riyadh, foresees no problem with the price of the iPhone X.
“We are expecting very good sales of the iPhone X,” Edrees said.
“The price is not a problem, it will sell at around SR5,000 ($1,333) and that is not a problem for our customers, they love Apple and they love the iPhone. It is very popular in Saudi Arabia.”
He did, however, anticipate a marked difference in sales between the anniversary iPhone X and the iPhone 8.
“We expect the iPhone 10 to sell very well, but the iPhone 8 not so much. The 10 is completely new, new design, everything is new.
“The 8 on the other hand is very similar to the 7, the same design as 7, and the 6s.” which serves as a bridge between big investing communities in India and Africa. But should it really be rated more highly as a financial center than Riyadh?
The same applies to Casablanca in Morocco, Gibraltar, and the Philippines capital, Manila. All scored better than Riyadh, before we even come to the tiny European centers, like the Isle of Man, Luxembourg and Liechtenstein, all of which were much higher up the tables than the Saudi capital.
In the region, the disparity is even starker. Dubai and Abu Dhabi, from a similar cultural background and with the same challenges of geography and climate, were prominently at the top of the table. The UAE capital made it into the top 25 for the first time. Neither has the same advantage of a big domestic consumer market as Saudi Arabia, but both have committed themselves to creating an indigenous financial industry and both are perceived as being welcoming to foreign finance and financiers.
Mark Yeandle, the Z/Yen executive who gave the presentation in Abu Dhabi, explained Riyadh’s shortcomings like this: “It is an international professional perception rather than a fundamental problem. Everyone knows there are vast reserves of wealth which will have a big impact on Riyadh. But it’s difficult to have an international capital without international people.”
He meant that Riyadh has basic problems in attracting the global elite that forms the mainstay of the international financial industry. The two UAE cities have built and promoted their own financial hubs, as expatriate centers with some autonomy in granting visas, independent legal systems, benefiting from hard and soft infrastructure appropriate for the modern world of finance.
Riyadh has largely built the King Abdullah Financial District on its outskirts, intended as the response to the UAE hubs, but the huge development has barely attracted any of the big global firms — banks, lawyers, accountants, consultants — necessary to make such a center work. Delays and bureaucratic obstacles have deterred the “international people” from opening up in the district.
Maybe Yeandle is right, and in the end the vast amounts of capital involved in one of the biggest privatization strategies the world has ever seen will eventually bring the international financial community flocking to Riyadh.
But really, more could be done to promote the attractions of the Kingdom. It undoubtedly has the business, but it needs more to attract the businessmen and women who will get it done.
Frank Kane is an award-winning business journalist based in Dubai. He can be reached on Twitter@frankkanedubai
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