African Demand for Smartphones Has Tripled in a Year

African Demand for Smartphones Has Tripled in a Year
African makers of electronics such as VMK’s Elikia pictured above are also trying to capitalize on African demand

AFRICANGLOBE – Samsung Electronics is preparing to beat its $10bn target for revenue from Africa in 2015. And according to George Ferreira – Vice-president and chief operating officer of Samsung Africa – the company is also looking at the possibility of setting up more assembly plants to avoid tariff barriers.

Is South Africa still your biggest African market, and do you expect it to be so for the new Samsung Galaxy S4?

George Ferreira: For the S4, I would say that the South African market is probably on par with the Nigerian market, although I foresee that the Nigerian market should probably overtake the South African market in terms of smartphones.

The premium smartphone is really an aspirational product for everybody. The demand that we’ve seen from the distributors, from the consumers, from the partners, from the telecos across Africa has really been phenomenal.

Demand for the S4 this year across Africa is triple what we saw for the S3 in June 2012. When we launched the S3, there were only limited operators across Africa actually wanting direct supply from Samsung. Most of it was on the open channel in Africa.

With] the S4 now, it’s completely flipped on the other side. We’ve had just about every single country, where the most dominant or even sometimes every single operator in the country has contacted Samsung and wanted to do a deal with us to have the S4 available at launch.

What’s the cheapest smartphone you sell in Africa?

The most affordable is our entry-level Galaxy Pocket. In South Africa, it retails for $100. Elsewhere in Africa, it’s probably around the $110-$120 mark. The successors of the Galaxy Pocket are the Galaxy Neo and Galaxy Star. They have been available from April. We will see them be- ing positioned more aggressively in the market, at around the $100 price point.

Is a sub-$50 smartphone still some way away?

If I look at the Tier 1 manufacturers – Samsung, Apple, Nokia, Blackberry, HTC, Sony – I think we’re still a distance away from the $50 smartphone. If I look at Tier 2 and Tier 3 – the brands that are coming out of Asia – maybe they would get it down to $50, but I wouldn’t be able to comment on the quality or the experience or the ecosystem that they’d be able to offer on such a device.

Are duties on smartphones a barrier for Samsung?

It doesn’t have a positive influence on sales. Duties should be relieved on smartphones, as we’ve seen in Ghana, where there are very minimal duties on devices and we’ve seen that the market has really taken off.

But there’s still a very high duty on tablets, and then the adverse conditions happen: the tablet business has not really taken off. What you see is a huge influx of grey market items and smuggling of that product into the country, which bypasses the authorities.

Will it become necessary for you to start manufacturing or assembling some devices in Africa to avoid duties?

Today we’re still nowhere close to it, but I would say that in the next three, four or five years, assembling, not manufacturing, of some mobile handsets and some tablets could become a reality in Africa.

Meeting Samsung quality would be our first priority because it would not only be for the African region. We would probably even look at exportation.

For now, we do television assembly in Nigeria. We’re looking at refrigeration. We already do air conditioning in Nigeria and Senegal.

What is Samsung’s turnover in Africa?

Our goal is that we set a $10bn plan by 2015. This mid- and long- term strategy was established in 2010. We could very well beat our target.

 

By: Gemma Ware