COVID-19, economic uncertainty hit SA smartphone market

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Smartphone shipments to SA suffered a double-digit decline during the third quarter of this year, as the COVID-19 pandemic eroded economic gains, impacting local purchasing power, according to research firm International Data Corporation (IDC).

It says rising unemployment rates and economic uncertainty caused by the pandemic continue to shift consumer buying patterns toward affordable and feature-rich products.

Africa's largest smartphone markets recorded mixed performances – Egypt and Nigeria both posted year-on-year (YOY) growth in Q3 2020, while SA suffered a decline.

IDC says smartphone shipments to Nigeria grew due to a shift from vendors to entry-level and mid-range devices. Similarly, the Egyptian smartphone market grew as vendors offered devices with more competitive prices, larger screens and improved features.

Contrarily, the newly published IDC Quarterly Global Mobile Phone Tracker shows SA experienced a 13.4% YOY drop in shipments; however, it continued to lead the way in Africa's smartphone market, with shipments to the country totalling 3.3 million units.

Arnold Ponela, a research analyst at IDC, says: "South Africa is struggling with economic hardships, but smartphones have become an essential consumer item, making it a resilient market in a downturn.

"While South Africa's smartphone market experienced a YOY decline, shipments actually increased 17.8% quarter-on-quarter as lockdown restrictions were lifted and the channels replenished their inventories for Q4 promotions."

According to IDC, Africa's overall mobile phone market shipments declined 6% YOY in Q3 2020.

Brand progress

The firm says Transsion brands (Tecno, Itel and Infinix) continued to dominate Africa's smartphone space in Q3 2020, with 42.2% unit share. Samsung and Huawei followed in second and third place, with respective unit shares of 19.9% and 8.7%.

“The Transsion brands (Tecno and Itel) also dominated the feature phone landscape with a combined share of 76.6%. Nokia came in third with 8% share of feature phone shipments.”

In terms of price bands, the tracker notes devices priced below $200 accounted for 89.3% of smartphone shipments to Africa in Q3 2020.

“The share of smartphones priced below $100 declined slightly from 53.8% in Q2 2020 to 53% in Q3 2020, while the share of devices priced $100-$200 increased from 34.7% to 36.3% over the same period.”

Ramazan Yavuz, a senior research manager at IDC, comments: “Demand for entry-level smartphones was driven by e-learning requirements since smartphones are the only device offering Internet access for most households in Africa. The mid-range segment ($200<$500) declined YOY, as consumers held back on upgrading to more expensive smartphones due to economic uncertainties."

Looking ahead, IDC expects the recovery in shipments seen in Q3 to continue through Q4 2020 during the festive months, with overall shipments expected to grow 4.6% quarter-on-quarter.

“The prospects for 2021 will depend on improvements in the overall economy, which will be largely dictated by the availability of a COVID-19 vaccine. Aside from this factor, all market indicators are pointing towards supply-chain constraints fully easing out during the second half of 2021, with demand returning to normal as economic recovery starts,” notes iDC.

International trends also saw worldwide smartphone sales go down 5.7% in Q3 compared to the same period last year, according to Gartner.

Gartner says overall global mobile phone sales to end-users totalled 401 million units, a decline of 8.7% YOY.

“Consumers are limiting their discretionary spend, even as some lockdown conditions have started to improve,” says Anshul Gupta, senior research director at Gartner. “Global smartphone sales experienced moderate growth from the second quarter of 2020 to the third quarter. This was due to pent-up demand from previous quarters.”

The research firm says economic uncertainties and continued fear of the next wave of the pandemic continue to put pressure on non-essential spending through the end of 2020.

“The delay in 5G network upgrades has also limited the opportunity for smartphone vendors,” it says.

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