Smartphones usurp feature phones

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Smartphone shipments have reached unprecedented levels, while feature phone cargos continue to lighten.
Smartphone shipments have reached unprecedented levels, while feature phone cargos continue to lighten.

Smartphone penetration is on a rapid rise in the Middle East and Africa (MEA), with the region having seen unprecedented year-on-year (YOY) growth in 2014.

Meanwhile, declining feature phone shipments indicate these yesteryear devices are slowly on their way out.

This is according to International Data Corporation's (IDC's) fourth quarter Handsets Tracker, released yesterday. The entity's tracker shows smartphone shipments to MEA saw record YOY growth of 83% in 2014.

"Spurred by the increased availability of cheaper models and dual-SIM devices, the global advisory and consulting services firm announced smartphones accounted for 41.9% of all mobile handset shipments to the region in 2014, up from 27% in 2013, with the overall handset market expanding 19.6% in volume year-on-year."

Feature phones have been hit hard by the increased availability of more affordable smartphones, with shipments down 4.5% year on year in 2014. "Indeed, smartphones priced under $100 captured 20% share of the MEA smartphone market in 2014, up from just 5% in 2013," says IDC.

Market share of smartphones in the $100 to $200 price bracket increased eight percentage points in just one quarter, from 25% in the third quarter of 2014 to 33% in the last quarter. Meanwhile, smartphones priced in the higher-end $250 to $500 bracket have seen their share of the overall market fall from 23% in Q3 2013 to 18% in Q4 2014.

Market strategy

Nabila Popal, IDC research manager for handsets and display solutions in MEA, says many new vendors have been eager to get into the region's burgeoning smartphone space, with a number launching phones in the growing $250 to $500 price band. "This strategy of targeting the mid- and low-end of the market has contributed significantly to the success of vendors like Huawei and Lenovo."

The growing popularity of dual-SIM smartphones is also helping shape the market, with shipments of such devices increasing 34% YOY in Q4 2014, says IDC.

Isaac Ngatia, a senior research analyst at IDC MEA and Turkey, notes vendors like Samsung and HTC launched variants of their flagship S5 and HTC One M8 models with dual-SIM capabilities. "Demand for such devices stems from the fact that a growing band of consumers want to enjoy cheap cross-network calls and offers from multiple telcos and therefore retain more than one SIM card for their personal use."

Most of the growth in the smartphone category was witnessed in countries that have larger populations but previously had low penetration rates. For example, smartphone shipments to Nigeria and Kenya increased 135% and 112%, respectively, YOY in 2014, while Pakistan saw growth of 105% over the same period.

Vendor standing

The overall handset market's vendor dynamics also changed by the end of 2014. Although Samsung maintained its number-one position in MEA, its smartphone share fell from 51.5% in 2013 to 43.8% for last year.

Huawei and Apple followed in second and third place with shares of 8.9% and 7.8%, respectively. The same trend can be seen quarter-on-quarter, with Samsung's share dropping 7.8 percentage points from the third to last quarter of 2014, while Huawei and Apple saw their shares increase 5.1 percentage points and 2.7 percentage points, respectively, over the same period.

"Apple's growth is primarily due to the incredible success of its iPhone 6 and iPhone 6 Plus models, which finally placed the vendor in the large screen size segment that had previously been dominated by Samsung," says Popal. "Many users that had made the switch from Apple to Samsung specifically for the larger screen sizes have now started to switch back."

Meanwhile, Huawei has experienced a wave of growth in the mid- to low-end segment, with its Honor 3 and Ascend Y series enjoying success. "The vendor has struck the right balance between quality and price, particularly in some of the region's more emerging markets where it is even killing the local competition."

Like in other global markets, the MEA market witnessed a massive 58% increase in the shipment of iOS devices in the last quarter of 2014 when compared with the previous three months. Android shipments increased by only 3.8% over the same period, while BlackBerry OS continued its declining trend after a temporary increase in the third quarter of 2014.

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