Despite the rising cost of living and tough economic forecasts, smartphone makers are still seeing demand for their premium devices among domestic consumers.
Justin Hume, Vice President of Mobile Experience at Samsung South Africa, yesterday pointed to the resilience and strength of the South African mobile phone market over the past couple of months, saying his company continues to grow in its premium segment.
According to Hume, the S22 Ultra, the top-of-the-range device in the S22 series, accounted for 50% of the range’s sales.
The South Korean smartphone maker expects growth to continue into 2023 as it unveils its latest Galaxy S23 series, which will be available from February 24.
Hume claims that the past few months have been challenging as macroeconomic conditions, geopolitical tensions and the like have created uncertainty in the technology market.
With this in mind, consumers have had to think very carefully about where they are going to invest and have a hard time choosing the goods and services they want to buy.
Hume revealed that Samsung’s domestic customers have responded “positively” in these challenging times to year-on-year growth, such as the S22 series and the foldable series.
“We believe this growth will continue into 2023 with product launches.” [Galaxy S23 series]especially when we focus on the premium category led by the Ultra brand.
Hume admitted that he has questions about the timing of a product range like the S23 series this year, with 2023 expected. will continue to challenge the technology industry.
He explained: “We expect the mobile phone market in South Africa to grow by around 4% this year. This is still driven by issues such as the migration from 2G to 4G, which is very common in the mid-range markets, as well as the affordability issue, which we address through platforms such as Samsung Trade. This is key to making technology upgrades a reality for many South Africans.
“Importantly, the premium segment will grow more than twice as fast as the standard market, and this shows the willingness of consumers to take advantage of 5G technology platforms, enhanced media services and ecosystem.”
Justin Hume, Vice President, Mobile, Samsung South Africa.
Industry observers say that while consumers have had to tighten their belts, attractive payment options are often the main draw for high-end smartphones.
Arnold Ponela, IDC’s senior research analyst for mobile technology and image printing and document solutions for South Africa and sub-Saharan Africa, notes that telcos offering lucrative package deals that include device acquisition, airtime and data are one of the drivers.
“Despite the economic challenges, demand for premium smartphones has increased, largely supported by the expansion of installment plans offered through telcos, retail channels and even directly from vendors.” Promotional activities related to trade-in offers are also supporting the growing demand for premium smartphones.
Thecla Mbongue, Head of Middle East and Africa Research at Omdia, explains that from the perspective of the South African market, premium smartphones are generally sold through financing schemes offered through contract networks or from banks and retail stores.
“This helps drive the upward trend.” However, unfavorable economic conditions and the rising cost of living are pushing some high-end users to mid-range and cheaper smartphones.
Cellucity director Christopher Henschel says demand for premium Samsung and Apple devices remains strong.
“Consumers are currently very conscious of the value and specifications of mid-range phones, and the R4 000-R8 000 device range has seen exceptional growth.
Henschel believes that the quality and specifications of mid-range devices are now compelling. “With load shedding, people are more dependent on a quality screen and good battery life to keep them entertained when the lights go out.
David McQueen, director of research at ABI Research, comments that Samsung’s latest set of flagship smartphones comes at a time of ongoing global macroeconomic instability, which is reducing demand in the sector.
While much of this pressure came from the decline in mass-market smartphones, premium smartphones held up well and were relatively unaffected by such economic fluctuations.
“For Samsung to stay relevant in the premium sector, this latest batch of Galaxy S devices will help keep it competitive until the next batch of rival smartphones are introduced.”
“Furthermore, the expansion of the 5G and foldable smartphone portfolio is expected in 2023.” will help Samsung consolidate revenue growth and maintain leadership in a shrinking market,” notes McQueen.
Conversely, other consumers are said to be buying mid-range phones, which are now popular, and the used smartphone segment is also growing rapidly.
Ponela points out that consumers are moving from feature phones to affordable entry-level smartphones, and vendors and telecom operators are working together to bring entry-level smartphones to consumers through subsidies.
He concludes: “The share of 5G devices will continue to grow and more vendors will push their portfolios towards 5G. Consumers are moving to larger screens, longer distance devices, including larger storage options, as they stay on their devices longer, so they are willing to pay a little more to get a better and bigger device.