SA smartphones hammered as sales decline after festive season

South Africa’s mobile market has taken a hit as smartphone sales decline after the festive shopping season, says an industry tracker.

According to data from the International Data Corporation (IDC), the South African market reflects a continent-wide drop of 6.3% in the first quarter of 2018, and 3.9% year-on-year decline with 52.1 million units shipped.

The IDC said that smartphone shipments declined 27.4% in South Africa and 6.4% in Nigeria.

“The drop in South Africa is simply down to seasonal factors, with Q1 traditionally being the slowest quarter of the year and unable to match the buoyant sales seen in Q4, traditionally the strongest, when demand is stirred by Black Friday and the Christmas season,” said Nabila Popal, a senior research manager at IDC.

Popal attributed Nigeria’s slowing growth to expensive broadband rates and slow connectivity.

Price

In South Africa, the IDC found that price was a determining factor for smartphone sales, with the majority of devices priced below $150 (about R2 000) dominating sales.

“While South Africa is one of the continent’s most developed markets, a large proportion of the market still centres around low-end to midrange devices priced below $150,” said Popal.

“Affordable smartphones that fall into this price range have seen a lot of growth over the last two years, fuelled by local brands like Mobicel, MINT, and Vodacom. With disposable income limited for the majority of consumers, most spending on mobile devices takes place in Q4, leading to an inevitable drop-off in Q1.”

The Mobicel R9 Plus features a large 5.7-inch (14.5cm) display, octa core processor, and 16-megapixel (MP) main camera, but sells at R2 999, cheaper than similarly-specced rivals from Huawei and Samsung.

Also in the midrange is the Hisense Infinity KO, which features a 13MP main shooter and comes with a two-year warranty. It is priced at R3 499.

South African mobile operators have shown resilience amid lower smartphone sales data.

In its March 2018 annual results, Vodacom reported an 8.1% increase in revenue (to R69.9-billion) on the back of 4.5 million additional customers, with data revenue jumping 12.8% to R23.4-billion.

Handset income

MTN highlighted R42.5-billion revenue (a 3% increase) in South Africa and a 25.8% increase in data revenue to R14.1-billion in its 2017 year-end financial results.

MTN reported increased income of R10.7-billion from handsets and accessories and Vodacom reported R18.4-billion (a 9.9% increase) from active smart devices on its network.

Handset sales accounted for 27.7% of Vodacom Group earnings before interest and taxes (EBIT).

The IDC expects low growth of 0.5% in smartphones for the second quarter and a 0.6% decline year-on-year. — Fin24

Duncan Alfreds
Duncan Alfreds
Content Producer, News24 and Tech News Writer, Fin24.com
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