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Premium smartphone sales defy SA’s gloomy economy

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 02 Feb 2023

Despite the rising cost of living and tough economic forecasts, smartphone makers are still seeing demand for their “cream of the crop” premium devices among local consumers.

Justin Hume, vice-president of mobile experience at Samsung South Africa, yesterday noted the resilience and strength of the South African mobile phone market over the past couple of months, saying his company continues to make gains within its premium segment range.

According to Hume, the S22 Ultra – the high-end device from the S22 series – contributed 50% of that range’s sales.

The South Korean smartphone maker expects growth to continue into 2023, as it unveils its latest Galaxy S23 series that will be available locally from 24 February.

Weathering the storm

Hume contends the past couple of months have been challenging, as macro-economic conditions, geopolitical tensions and the like created uncertainty within the tech market.

With this in the background, consumers have had to really think hard about where they are going to invest, making tough choices about the goods and services they are willing to purchase.

Hume revealed Samsung’s local customers responded “positively” during these challenging times, to create year-on-year growth for the likes of the S22 series and the foldable series.

“We believe this growth will continue into 2023, with the launch of the products [Galaxy S23 series], particularly as we focus on the premium category, which is led by the Ultra brand.”

Hume acknowledged he faced questions about the timing of launching a product range like the S23 series this year, given that 2023 is expected to continue to present challenges for the technology industry.

He explained: “We anticipate that the mobile phone market in South Africa will grow at about 4% this year, in terms of handsets. This is still driven by issues like 2G to 4G migration that’s very prevalent in the mid-tier markets, as well as the affordability issue we’re addressing through platforms such as Samsung’s trade-in. These are key to making technology up-streaming a reality for many South Africans.

“Importantly, the premium segment is expected to grow at more than two times the rate of the standard market, and this goes to show the desire from consumers around leveraging 5G technology platforms, enhanced media services and the ecosystem.”

Justin Hume, vice-president of mobile experience at Samsung South Africa.
Justin Hume, vice-president of mobile experience at Samsung South Africa.

Industry commentators say while consumers have had to tighten their belts, attractive payment options are often the main pull for premium smartphone purchases.

Arnold Ponela, IDC senior research analyst for mobile technologies and image printing and document solutions for South Africa and Sub-Saharan Africa, notes telcos offering lucrative bundled contracts that cover the purchase of the device, airtime and data are among the driving forces.

“Notwithstanding the economic challenges, we have seen an increase in demand for premium smartphones, largely supported by the expansion of instalment plans offered through telcos, retail channels and even direct from vendors. Promotional activity around trade-in offers also supports the growing demand for premium smartphones.”

Thecla Mbongue, research manager for Middle East and Africa at Omdia, explains that from a South African market point of view, premium smartphones are essentially sold via financing schemes offered on contract networks, or from banks and retail stores.

“This helps drive the growth trend. However, adverse economic conditions and rising cost of living are pushing some high-end consumers towards mid-range and more affordable smartphones.”

Cellucity director Christopher Henschel indicates demand for premium Samsung and Apple devices remains strong.

“The value and specifications of mid-tier phones is now a huge consideration for consumers and we have seen exceptional growth in the R4 000 to R8 000 device ranges.”

Henschel believes the quality and specifications of the mid-tier devices are now compelling. “With load-shedding, people are more reliant on a quality screen and good battery life to keep them entertained when the lights go out.”


David McQueen, research director at ABI Research, comments that Samsung’s latest set of flagship smartphones comes during a period of sustained global macro-economic instability, leading to weak demand in the sector.

While much of this squeeze is down to a decline in mass-market smartphones, the high-end has held up well and has been relatively unaffected by such economic fluctuations.

“For Samsung to stay relevant in the premium sector, this latest set of souped-up Galaxy S devices will help keep it competitive until the next raft of competing smartphones is launched.

“Moreover, an expected portfolio expansion of 5G and foldable smartphones throughout 2023 will help Samsung consolidate revenue growth and sustain leadership in a contracting market,” notes McQueen.

Conversely, other consumers are said to be shopping around for value in mid-tier phones, which are popular now, and there is also strong growth in the pre-owned smartphones segment.

Ponela points out that consumers are transitioning away from feature phones toward affordable entry-level smartphones, and vendors and telco operators are working together to provide consumers with entry-level smartphones using subsidises.

He concludes: “5G devices will continue to ramp up in share, with more vendors pushing their portfolio toward 5G. Consumers are moving toward bigger screens, higher-spaced devices, including higher storage options, as they are holding onto their devices for longer, so they are willing to pay slightly more to get the better, larger device.”