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Vodacom makes smart push to become handset player

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As mobile operators struggle to maintain revenue growth in a saturated market, Vodacom’s own branded phones are making a big impact, writes ARTHUR GOLDSTUCK.

The numbers don’t look good for mobile operators right now.  In their most recent annual results, MTN reported group revenue up 5 per cent, running behind inflation in South Africa. Vodacom’s latest quartely results showed marginally higher growth, at 5.8%, almost catching up to inflation.

The challenge that has faced operators for several years now, as voice revenues plateau and rising data revenues don’t rise fast enough to replace the voice slow-down, has been to find new revenue streams.

Very quietly, they have been doing just that in the handset arena, with MTN punting the locally manufactured Mint devices and now getting behind the rising Chinese brand Xiaomi. Vodacome has taken a far more aggressive approach to this strategy, rolling out a wide range of devices under the brand of its parent company, Vodafone.

No less than six new Vodafone devices have been released in South Africa, with a seventh on the way. There are three likely winners as a result:

  • Vodacom itself will enjoy higher margins from its own devices;
  • Consumers will benefit from high-spec devices at low-end prices; and
  • Their manufacturer, Alcatel, will find itself in the uncustomary position of being a market leader beyond only its entry-level Pixi phones.

Alcatel manufactures Vodafone-branded smartphones by virtue of winning a tender that is put out from time to time. However, it’s not merely a matter of being able to make the phones most cheaply.

Alcatel has proven itself at both the entry-level, with its sub-R600 entry-level smartphone, the Pixi – which has at times been the top-selling phone in southern Africa – and its mid-range Idol phones. This year it also introduced the Go Play ad Pop Star ranges, aimed respectively at active and youth markets.

That cements it as a technology leader in the segments where operators see the biggest opportunity for their own brands. They can’t compete at the high end with the likes of Apple and Samsung, or even Sony and LG, whose brands are associated with both the highest quality and the top specifications available.

However, the real volume in emerging markets comes from mid-range phones costing anywhere from R2 000 to R8 000, and entry-level phones costing less than R1 000.  These are usually not the most profitable phones, as their margins are much lower than those of the big brands’ flagship devices. However, by taking out the cut that goes to the big brands, the cheaper phones suddenly become much more profitable.

In the financial year ending 31 March 2016, Vodacom sold 6,5-million smart devices, of which 25 per cent were Vodafone branded – up from 16.8 per cent a year before. The growth in revenues from this division marginally outpaced overall revenue growth.

This sets the stage for the next big growth spurt in device sales from Vodacom, as it makes the transition away from non-smart handsets. In the year to March, almost 4-million of its 10.4-million device sales fell into the latter category. In the next year, that segment will begin to vanish as the new range kicks in.

The new devices from Vodacom include:

Vodafone Smart platinum 7 LTE Smartphone

The flagship Vodacom phone retailing at a recommended price of R8509, will be available on a 24-month contract at R399 per month.

Customers will also get a Smart VR basic virtual reality headset, and a free one-year subscription to Microsoft Office 365, which includes a license for three devices and 1TB of cloud storage.

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Vodacom Smart ultra 7 LTE Smartphone

The budget alternative to the platinum, at R3 539 for purchase, and R199 per month on contract. It also comes with a one-year Microsoft Office 365 license for three devices, with 1TB of cloud storage. 

Vodacom Smart prime 7 LTE Smartphone

The entry-level big-screen smartphone, at R1 799 outright and R129 per month. Also with Microsoft Office 365 license for three devices and 1TB of cloud storage.

Vodacom Smart Kicka 2

The best value entry-level smartphone on the market, at R499 outright or R59 a month.

The Kicka is the standout devices here. Given the poor exchange rate, it is an absurdly cheap phone, with a powerful quad core processor, 1400 mAh battery, 2Mp camera and 4GB storage, expandable with a micro SD slot. It runs Android 5.1, which just a couple of years ago would have made it a cutting edge phone.

However, the big surprise comes from the flagship phone, the platinum 7. It’s 16MP rear camera produces photos as good as anything outside of the Samsung S6 and S7 devices. Those cost almost twice as much, so one would expect their images to be better, but many other phones costing far more than the Vodafone flagship cannot match its image sharpness. While the phone itself is slow, it is ideal for someone who wants a phone for the camera quality but cannot afford the top of other manufacturers’ ranges.

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 Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram on @art2gee

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Samsung S10 in lock-step with its rivals?

Tonight Samsung will kick off the next round in the smartphone wars with the S10 range, writes ARTHUR GOLDSTUCK.

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When Samsung unveils the new S10 smartphone at an event in San Francisco today, it will mark the beginning of the 2019 round of World War S. That stands for smartphone wars, although Samsung would like it to be all about the S.

Ever since the launch of the Samsung Galaxy S4 in 2013, Samsung has held both technology and thought leadership in the handset world. Back then, Apple’s iPhone 5 was the last device from the American manufacturer that could lay claim to being the best smartphone in the world. With the 2013 launch of the iPhone 5s, Apple entered an era of incremental improvement, playing catch-up, and succumbing to market trends driven by its competitors.

Six years later, Samsung is fighting off the same threat. Its Chinese rival, Huawei, suddenly wrested away leadership in the past year, with the P20 Pro and Mate 20 Pro regarded as at last equal to the Samsung Galaxy S9 Plus and Galaxy Note 9 – if not superior. Certainly, from a cost perspective, Huawei took the lead with its more competitive prices, and therefore more value for money.

Huawei also succeeded where Apple failed: introducing more economical versions of its flagship phones. The iPhone 5c, SE and XR have all been disappointments in the sales department, mainly because the price difference was not massive enough to attract lower-income users. In contrast, the Lite editions of the Huawei P9, P10 and P20 have been huge successes, especially in South Africa.

Today, for the first time in half a decade, Samsung goes into battle on a field laid out by its competitors. It is expected to launch the Galaxy S10 Plus, S10 and S10 e, with the latter being the Samsung answer to the strategy of the iPhone XR and Huawei P20 Lite.

Does this mean Samsung is now in lock-step with its rivals, focused on matching their strategies rather than running ahead of them?

It may seem that way, but Samsung has a few tricks up its electronic sleeve. For example, it is possible it will use the S10 launch to announce its coming range of foldable phones, expected to be called the Galaxy X, Galaxy F, Galaxy Fold or Galaxy Flex. It previewed the technology at a developer conference in San Francisco last November, and this will be the ideal moment to reclaim technology leadership by going into production with foldables – even if the S10 range itself does not shoot out the lights.

However, the S10 handsets will look very different to their predecessors. First, before switching on the phone, they will be notable by the introduction of what is being called the punch-hole display, which breaks away from the current trend of having a notch at the top of the phone to house front-facing cameras and speakers. Instead, the punch-hole is a single round cut-out that will contain the front camera. It is the key element of Samsung’s “Infinity O” display – the O represents the punchhole – which will be the first truly edge-to-edge display, on the sides and top.

The S10 range will use the new Samsung user interface, One UI, also unveiled at the developer conference. It replaces the previous “skin”, unimaginatively called the Samsung Experience, to introduce a strong new interface brand.

One UI went live on the Note 8 last month, giving us a foretaste, and giving Samsung a chance to iron out the bugs in the field. It is a less cluttered interface, addressing one of the biggest complaints about most manufacturer skins. Only Nokia and Google Pixel handsets offer pure Android in the local market, but One UI is Samsung’s best compromise yet.

It introduces a new interaction area, in the bottom half, reachable with the thumb, with a viewing area at the top, allowing the user to work one-handed on the bottom area while still having apps or related content visible above. One UI also improves gesture navigation – the phone picks up hand movements without being touched – and notification management.

The S10 range will be the first phones to feature the latest Qualcomm Snapdragon 855 chip, at least for the South African and American markets. That makes it 5G compatible, for when this next generation of mobile broadband becomes available in these markets.

They will also be the first phones to feature Wi-Fi 6, the next generation of the Wi-Fi mobile wireless standard. It will perform better in congested areas, and data transfer will be up to 40% faster than the previous generation.

The phones will be the first to use ultrasound for fingerprint detection. If Samsung gets it right, this will make it the fastest in-screen fingerprint sensor on the market, and allows for a little leeway if one pushes the finger down slightly outside the fingerprint reader surface. It does mean, however, that screen protectors will have to be redesigned to avoid blocking the detection.

Not enough firsts? There are a few more.

Most notably, it will be the first phone range to feature 1 Terabyte (TB) storage – that’s a thousand Gigabytes (GB) – at least for the top-of-the-range devices. Samsung last month announced that it would be the first manufacturer to make 1TB built-in onboard flash storage. Today, it will deploy this massive advantage as it once again weaponises its technology in the fight for smartphone domination.

  • Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram on @art2gee

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IoT set to improve authentication

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By Sherry Zameer, Senior Vice President, Internet of Things Solutions for CISMEA region at Gemalto

As it rapidly approaches maturity, the Internet of Things (IoT) is set to continue a transformational trajectory, introducing new efficiencies in multiple fields by allowing measurement and analysis on a scale that has never been possible before. From agriculture to logistics, from retail to hospitality, from traffic to health, from the home to the office, the applications for monitoring ”things” are limited only by the imagination.

And South African (and African) businesses are showing abundant imagination in their practical deployments of IoT solutions in multiple settings, creating a better tomorrow through almost universal measurement and the introduction of new levels of convenience – including how to access locations, devices and services securely.

Any company, whether South African or international, should bear in mind that understanding consumer expectations can be the key to unlocking the full potential of IoT devices and related smart services.

According to Gemalto’s latest Connected Living study, improving the way consumers authenticate themselves to services is one of the most anticipated benefits of IoT, highlighting a desire for a more seamless and secure IoT experience.

Consumers are interested in advanced ways of authenticating themselves through automatic (based on behavioral patterns) or biometric techniques, lessening the need to have to intervene manually, all in the name of a much more streamlined authentication process. Smartphone manufacturers like Apple and Samsung have already placed fingerprint and facial recognition high on the agenda. There is also a widespread positive sentiment towards IoT’s potential for improving the quality of home life through connected, smart appliances.

Personalised services is something else that wins consumers over. In fact, a fluid, personalised and unified experience with continuity of services, together with security and privacy, is critical for the successful implementation of any technology.

And those types of services are today quite possible. With everything being connected – from small gadgets to digital solutions for large enterprises – IoT is no longer just a buzzword. That much is clear in a piece from Vodacom IoT managing executive Deon Liebenberg. Writing for IOL Online, Liebenberg provides insight into the sheer range of applications for IoT: the 20 use cases he cites range from the obvious, like transport and logistics, to the connected home and wearables; he even suggests tagging pets with IoT transmitters, for those who always need to know the whereabouts of the family cat.

Low-cost tags fitted to cats, dogs, lamp posts, shipping containers or other items are just one part of the puzzle, however. There are other two pieces; arguably the most complex part is the availability of communication networks in areas where there aren’t any WiFi networks, or indeed, anything else.

And that’s where the bigger takeaway from Liebenberg’s piece and other IoT trends articles becomes apparent. The communication networks are there, as are those tags: dedicated IoT networks (like LoraWAN, SigFox and narrowband IoT) are all available in South Africa.

So, too, is the third and final essential component. Software which is able to process the data generated by the tag and transmitted over the IoT network and into the internet. In this regard, there’s no shortage of solutions available from cloud providers like AWS and Azure; electronics giant Siemens, too, is in on the action, having recently launched a new cloud-based IoT operating system to develop applications and services for process industries, including oil and gas and water management.

This combination means it is quite possible right now to enable just about any use case. Business owners, who will know best how IoT can add value in their organisation, can now see their ideas becoming reality. Most crucial of all, IoT solutions delivering new levels of efficiency and convenience are not only possible, they are able to be offered with the simple and effective security that will drive consumer acceptance.

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