Boksburg phones: will SA bite?

Seemahale Telecoms is not scared to try and make cheaper tablets and smartphones in SA, despite potential challenges.

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Home-made devices, apparently comparable to those produced by top-selling international brands - but with the bait of a cheaper price tag - are due to hit the market early next year.

However, industry specialists question whether brand-conscious South Africans will bite.

Two South African companies, Seemahale Telecoms and CZ Electronic Manufacturing, have teamed up on a project that will see smartphones and tablets being designed and put together in a Boksburg factory, on Johannesburg's East Rand.

The mooted devices are a five-inch smartphone that will cost around R2 500, and a 10.1-inch tablet, for about R3 500 - both running on the Android operating system (OS).

Thabo Lehlokoe, chairman of Seemahale Telecoms, says from a price and technical specification perspective, the smartphone is similar to the Sony Xperia Go, Motorola Defy (MB525) and LG Optimus L7.

"We, however, have a higher screen display spec (960x540 pixel), a more powerful processor (dual-core 1.5GHz) and a bigger battery of 2250mAh." He notes the dual-SIM capacity and five-inch screen also set the phone apart.

The first run of devices should roll off the line in the first quarter of next year; about a year after the idea entered the pipeline. Lehlokoe says samples have already been developed.

He sees the devices as bridging the sizeable price gap between feature phones and smartphones.

Michael Gullan, MD and co-founder of brand communications agency Gullan&Gullan Advertising, says South Africans are "absolutely" brand-conscious - with cellphones being no exception - but there is a massive demand for smartphones among the lower LSM market. He says the majority of Internet access on social media platforms is mobile.

Seemahale and CZ Electronic Manufacturing's home-made smartphones will come in a variety of colours.

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On whether the Boksburg-made devices will sell in SA, Gullan says it depends how they are positioned and branded. "The challenge will be to compete against highly aspirational brands such as Apple, Samsung and BlackBerry, which have established brand equity and a global brand feel.

"Cellphones and tablets are aspirational branding devices, they position us among our peers in much the same way a Gucci or Louis Vuitton handbag or Rolex watch does."

He says it will not be as easy as making a device that is half the price of a Samsung or Apple unit. While the "Local is Lekker" and "Proudly SA" campaigns have made a difference in some sectors, Gullan says "in this sector, I don't see it".

Mike Sharman, owner of digital communications agency Retroviral, agrees South Africans are incredibly brand-conscious. "If you're not rocking the latest iPhone, you really are judged accordingly."

Sharman says the gadgets' future potential cannot be dismissed as brand equity shifts, as was the case with Samsung. However, he says there is a lot of brand-building to be done.

Ovum analyst Richard Hurst adds that while there is ample room in the market for such an offering, the end-user experience will be key to growing the brand.

However, Arthur Goldstuck, MD of World Wide Worx, says the devices will have to compete with well-established brands such as Nokia and Huawei. Although Nokia does not offer a five-inch smartphone, it is certainly a low- to mid-range device, he comments.

He notes there are also emerging low-cost devices coming out, such as the Vodafone-branded unit selling for R600, which runs Android and was built by Alcatel. He adds there are smartphones in Africa available for between $60 and $80.

"It will be difficult to persuade people to buy a no-name device," says Goldstuck, adding that consumers are looking for a brand name. "Locally, the iPad has 45% of the market, while Samsung has 39%. By the end of June, some 1.4 million tablets had been sold, of which 84% is a top-end brand."

CZ Electronic Manufacturing's Boksburg factory makes electronics for third-parties.

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Goldstuck cannot see the venture succeeding without support from the mobile operators. Lehlokoe says the company is in talks with mobile operators to offer the devices through that channel, as well as to white-brand them. He says they will also be available direct, and in retail stores.

No name brands, even sold at a discount, are not making an impact, says Goldstuck. He points out that Huawei has sold 80 000 units in two years. Lehlokoe says, while he has modest targets, for every 5 000 to 10 000 units made a month, 50 jobs will be created.

The devices, which will be on display at a stand at AfriCom, in November, will cover all frequencies needed by the operators between 800MHz and 2 300MHz, which makes them useable on Telkom Mobile's range.

Brand names are currently being worked on and a competition will be held to choose the best name, says Lehlokoe. He adds the units are in the process of being certified by the Independent Communications Authority of SA, as well as the South African Bureau of Standards.

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