Massive increase in SA smartphone purchases

The shift from feature phones to smartphones in South Africa is happening faster than anyone could have imagined just a few months ago.

Sales figures from the country’s largest mobile phone retailer, PEP stores, reveal a radical transformation in the phone-buying habits of the low- and middle-income segments of South Africa’s population.

PEP’s overall numbers, however, are equally startling. In the year to the end of June 2014, it sold no less than 6.7-million pre-paid phones – half of all phones sold on pre-paid deals in South Africa during that period, according to John Edwards, cellular executive at PEP.

The biggest surprise in its numbers, however, lurk in the smartphone sales figures.

In the half-year to December 2013, 1% of prepaid phones sold were smartphones. For the full year, by the end of June 2014, that number had shot up to 7%, implying a rise to 13% in the first six months of 2014.


But that’s not where it ends. In one month alone – March 2014 – the smartphone contribution was at 23%, thanks to special offers and new low-cost handsets.

“We’re forecasting that number to rise to 30% in the last quarter of the year,” said Edwards. “It’s driven by handset subsidies from the networks, but I suspect that if you took away the subsidies, the volumes wouldn’t be significantly lower.”

WhatsApp appeal
Edwards believes that smartphone demand has also been driven by the massive uptake of WhatsApp, the instant messaging app that is now accessible on many feature phones as well as all entry-level smartphones. 

The obvious devices, sub-R500 Android phones like the MTN Steppa and Huawei Ascend Y220, made a big contribution. However, PEP also made a massive impact by introducing a WhatsApp-specific feature phone: the AG Whutz-Zappa, at a cost of R399.

Thanks to a funky name and a WhatsApp shortcut button, it’s captured the imagination of the low-income segment that aspires to instant messaging services.

A camera, MP3 player and WAP browser means it’s got the basics, but it’s also, no doubt, a stepping stone towards owning a basic smartphone – which will come down to the same price in the next year or so.

Rethinking data pricing
That’s good and bad news for the mobile operators, who are struggling with strategies to cope with declining voice revenues.

“On the Android phones we sold, the average revenue per user (ARPU) is three times as much as on feature phones,” says Edwards. “There’s clearly a swing at the low end, from consumers who are desperate for access to Android devices and definitely to instant messaging.

“But that is only part of it. My gut feel is, if you put the tool in people’s hands, they will use it. Before I saw the ARPUs, I assumed it was all about WhatsApp. Clearly, the data wave is coming.”

That also means, however, that the operators will have to rethink their data pricing strategy. The network that is cheapest for voice calls, Cell C, is the most expensive for ad hoc use of data, at R2 per Megabyte.

“A PEP customer buys, on average, a R15 voucher,” says Edwards. “These guys live hand to mouth. You can’t give them bill-shock. If they lose R15 for an app running in background, they’re going to dump the phone.” – Gadget.co.za

Arthur Goldstuck is the founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter @art2gee.

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Related stories

Advertising

Subscribers only

‘Terrorised’ family shines a light on traditional leadership for vulnerable...

The ambiguity between traditional and constitutional leadership has been exposed by the violent banishment of an Eastern Cape family

Matrics fail at critical subjects

The basic education minister talks of quality passes achieved by the class of 2020, but a closer look at the results tells a different story

More top stories

Zulu land body challenges audit outcome

Ingonyama Trust Board chairperson Jerome Ngwenya has challenged the audit process in the face of a series of unfavourable ratings

The many faces of Idi Amin

Was he a joke, an oaf, a hero, or the evil dictator the West loved to hate? Decades after his death, his legacy is still a puzzle.

Review: Volvo XC40 is never intimidating

When you’re asked to drive 400km on a business trip, it really helps if you don’t have to do it in an old skorokoro. In this Volvo, it becomes a road trip to rival others.

Aliens in Lagos: sci-fi novel Lagoon offers a bold new...

Nnedi Okorafor’s ‘Lagoon’ is an immersive reimagining of Nigerian society that transports us into a future where queerness is normalised
Advertising

press releases

Loading latest Press Releases…