Summary
· The segment’s share of shipments rose from 41.6 percent in quarter 3 2022, to 43.8 percent in quarter 4 2022 as vendors raced to launch affordable smartphones with premium features targeting youthful customers
Nairobi. Shipments of smartphones that cost between $100 to
$200 are on the rise in Africa, defying a general slump in shipments caused by
skyrocketing inflation, global supply chain woes and economic uncertainties.
The segment’s share of shipments
rose from 41.6 percent in quarter 3 2022, to 43.8 percent in quarter 4 2022 as
vendors raced to launch affordable smartphones with premium features targeting
youthful customers.
Insights from the International Data
Corporation (IDC) show that while competition in the entry-level market segment
heated up in 2022, incumbent (Transsion-owned) brands Tecno, Infinix and Itel -
lost some ground to rivals, both new and old.
Transsion, the market leader with a
strong portfolio of entry-level devices, recorded a drop in its combined share
from 47.9 percent to 43.4 percent, as second-placed Samsung gained
significantly from a low of 19.6 percent.
“Samsung took second place with a
28.7 percent share thanks to the strong performance of its A04 model,” says the
IDC in its March 2023 quarterly mobile phone tracker report.
A comparative analysis by research
firm Canalys placed Samsung’s market share even higher, at 33%, against Transsion’s
49 percent, with Xiaomi at 6 percent and Chinese brand, Realme in fourth place
with 3 percent. According to Canalys, Realme recorded the largest annual growth
rate – 71 percent - by November 2022.
“We are seeing a surge in sales from
our entry-level segment, a pointer that reflects a growing demand for
functional devices that are also affordable,” said Realme Kenya PR &
Marketing Manager Mildred Agoya in a recent statement.
In 2022, Realme aggressively pushed
its entry-level smartphones under the brand’s C-series range, in the Kenyan
market.
It laid out a new plan to appeal to
young customers by increasing its research and development budget by 58 percent
to bolster technology innovation and the quality of its affordable smartphones.
These developments reflect heated
competition in the entry-level segment, with consumers benefitting from
improved features.
Among other premium features, most
entry-level smartphones now come with a high-resolution (as high as 50MP)
camera. A powerful battery backs them to accommodate heavy phone usage.
These attributes make the phones
very popular among first-time smartphone owners.
According to GSMA’s report, The
Mobile Economy Sub-Saharan Africa 2021, young consumers owning a mobile phone
for the first time will remain the primary source of growth for entry-level
smartphones for years to come. In this region, 40 percent of the population is
under 15 years.
In Kenya, while overall smartphone
shipments declined, the share of those priced at less than $200 rose to 55.3
percent from 41 percent in 2021, which the report attributed to vendors
shifting their portfolios.
Samsung, which controls the overall
smartphone market with a 31 percent share, leveraged its distribution through
an asset-financing platform, M-KOPA, which offers underbanked customers the
opportunity to purchase products like smartphones.
“While the general market sentiment
was negative in Q4 2022 and reflective of the supply chain squeeze that
occurred throughout 2022, those vendors that offered their products via
asset-financing platforms were the least impacted, demonstrating a growing
appetite for mobile financing schemes,” IDC senior research analyst, George
Mbuthia said.
Smartphone financing is on the rise
on the continent and continues to be activated in several countries to unlock
high-cost barriers to mobile phone ownership.
In March 2022, Telecom operator
Orange partnered with Netherlands-based Yabx and Cote d’Ivoire’s financial
institution, Cofina, to facilitate smartphone financing in the West African country.
“High one-time expenditure becomes a
key challenge to increase user adoption. We are confident that through this
partnership with Yabx, the high entry-cost barrier will be eliminated, which
will help in driving smartphone adoption,” said Orange Côte d’Ivoire Chief
Marketing officer Raoul Yobouet during the partnership launch.
In October 2022, Africa’s giant
telecom operator MTN unveiled a smartphone financing initiative in partnership
with Intellligra, an open platform for smartphone financing. The partnership
will leverage the buy-now-pay-later model to drive mobile adoption in the
country.
Watu, an asset FinTech best known
for its financing of two and three-wheeled vehicles across seven African
countries, now offers smartphone financing in Kenya and Tanzania.
Last year, Nigeria (32.1 percent)
and Egypt (56.2 percent) recorded the biggest declines in overall smartphone
shipments on the continent - the result of high inflation, a shortage of US
dollars in Nigeria and the devaluation of the Egyptian pound against the
dollar.
The South African market was the
least affected major mobile market in the region, with IDC analysts attributing
that to the market’s rising focus amongst Chinese vendors, improved performance
from incumbent brands and the festive season’s promotional activities.
Overall, the number of mobile phones
shipped to the continent dropped by more than 8 million units between 2021 and
2022, with feature phones recording the largest decline - from 27.1 million
units in 2021 to 22.7 million units in 2022 - according to IDC.
Shipments in the smartphone segment
dipped by nearly four million handsets, from 21.5 million units to 17.6
million.
But there is a ray of hope in 2023,
with IDC analysts projecting a modest rebound with an annual growth of 3
percent in shipments into the continent on improved demand constraints.
“This is modest growth for Africa
but given the level of uncertainty in the global and regional economy, there is
room for cautiousness in the region’s smartphone markets,” said a research
manager at IDC,Ramazan Yavuz.
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