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Online Gaming and Postponed Demand Reboots Russia's PC Market

Going very much against the global trend, sales of laptops and desktop PCs were both up in Russia last year, with growing consumer confidence finally putting long-delayed system upgrades and replacements back on the spending agenda.

Photo: Shooting up: Growth in gaming sees dramatic rise in desktop demand.
Shooting up: Growth in gaming sees dramatic rise in desktop demand.
Photo: Shooting up: Growth in gaming sees dramatic rise in desktop demand.
Shooting up: Growth in gaming sees dramatic rise in desktop demand.

With sales of desktop computers passing their peak in many markets and even laptop demand looking a little lacking on a global basis, Russia seems to be swimming against the tide with purchases up in both market segments. While in Western Europe, the US and in much of Asia, consumer spend has been diverted from such former hardy perennials to tablets and smartphones, Russian consumers are defying the odds by buying more in all four categories.

According to market analysts, this apparently counterintuitive phenomenon is down to one relatively explicable factor – postponed demand. Starting back in 2012-2013, when the Russian economy pretty much reached its nadir, consumers put planned upgrades on hold almost indefinitely. Now, just over five years later, sufficient confidence has ebbed back for these long-deferred purchases to finally get the go-ahead.

Indeed, when the dam burst, it did so in spectacular style. According to the industry's own figures, the combined sales of desktop / laptop computers and printers grew 20% year-on-year in 2018 in financial terms, taking the total spend to US$2 billion. In terms of unit sales, there was an accompanying 13% surge, taking the total for the year to 4.6 million items.

To put this into perspective, 2018 sales in the consumer computing sector virtually cancelled out the combined shortfall recorded in 2014-2017. Even more heartening, signs are that this sales upturn is going to be sustained – if not undergo a degree of continued acceleration – this year, a development likely to be driven by pending software updates and newly-introduced connectivity standards.

Overall, sales of laptop computers have grown the fastest, with the category up 25% last year, while desktops turned in a notably lower – though still impressive – 16%. Falling between the two was monitor sales, with a 22% increase recorded over the 12-month period. Perhaps unexpectedly, sales of ink-jet printers – technology previously considered all but obsolete – also enjoyed something of fillip, largely on account of their sheer affordability and ease of use.

Among the brands to benefit most from this upturn in demand were Lenovo, Asus, Hewlett-Packard, Acer and Apple, all of which offer models with the necessary processing power to meet the challenges of online gaming and cyber-sports, two of the key drivers of Russia's home-computing sector.

As well as being spec-appropriate, most suppliers are adept at choosing models likely to be within the budget range of the typical Russian consumer, with about $650 deemed to be the most appropriate price for entry-level PCs. Those models that incorporate more advanced processors – notably the Core i7 and i5 – command a premium, while also having enjoyed a rise in demand of about 50%. More impressive still, sales of notebook computers particularly geared to needs of high-end gamers are said to have gone up by 70%.

Tellingly, this boom in the PC market has done little to damage smartphone sales. Indeed, with 28.4 million units shifted, 2018 proved to be a record year for the sector. This was, undoubtedly, good news for Samsung, Huawei, Xiaomi and Apple, the four brands that jointly enjoy a 75% share of the market. With the typical Russian consumer now aiming to upgrade their smartphone once a year – and with 56% of them already planning to do so in the very near future – this is one market segment that is certain to continue to grow.

Similarly robust is the demand for computer peripherals and accessories, notably voice-recognition enabled smart speakers, virtual-reality helmets and smart-home systems. Overall, spending on such items is expected to rise from its current level of 2% of average annual household expenditure ($550) to more than 3% ($825) in the near term.

Also bundled with the above are smartwatches, although this particular subsector enjoyed an explosive surge in demand in its own right in 2018, with total unit sales up 600%, while the overall value of the market trebled. This impressive performance was down to a number of factors, including additional functionality and the introduction of GPS-enabled kids' tracker watches.

For those Hong Kong suppliers and distributors looking to capitalise on this upturn in Russia's home-computing market, the most prudent move would be to approach one (or more) of the e-commerce platforms that are currently the first port of call for many of the country's consumers. In particular, it would be worth checking out the opportunities offered by AliExpress, Tmall, JD.com and Ozon, the four most prominent players in the sector.

Photo: Alice through the plexiglass: Yandex translation system trounces non-Russian rivals.
Alice through the plexiglass: Yandex translation system trounces non-Russian rivals.
Photo: Alice through the plexiglass: Yandex translation system trounces non-Russian rivals.
Alice through the plexiglass: Yandex translation system trounces non-Russian rivals.

It may also be worth ensuring that any systems destined for the Russian market include features that have found particular favour among local consumers. A prime example here would be the Alice voice-recognition system created by Yandex, the company behind Russia's most popular search engine, which can interact far more fluently with native Russian speakers than the rival systems available from the likes of Google and Amazon.

Leonid Orlov, Moscow Consultant

Content provided by Picture: HKTDC Research
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