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SA consumers buy 3.2m smartphones in Q1

Smartphone sales in South Africa grew by 12.4% year-on-year in the first quarter of 2018, reaching around 3.2 million units for the period.

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However, the value of the smartphone segment increased by 22.8% as sales of entry-level devices to low- and mid-income consumers continued to drive the market, according to point of sale data from market research firm, GfK South Africa.

GfK South Africa’s data reveals that telecommunications retail enjoyed a strong start to the year, with revenue growing 22.4% year-on-year. The growing popularity of phablets and higher unit prices (as a result of a weaker rand) helped to drive this increase in revenue, against a backdrop of low or negative growth in many segments of the consumer technology market.

“The mobile device market showed good growth in the quarter, despite rising prices during the period under review,” says Norman Muzhona, Solutions Specialist for Telecommunications at GfK South Africa. “In addition to the exchange rate, the introduction of popular, new mid-tier devices by several leading vendors helped to drive higher retail revenues in the telecoms market.”

Information technology retail revenues for the quarter contracted 4.8% compared to 2017, largely because of decreasing monitor prices and a 38.9% decline in tablet revenues. However, desktop computer revenues grew 39% and mobile computing revenues grew 6.5% year-on-year, thanks to higher prices and increased sales of higher-end products.

Says Berno Mare, Solutions Specialist for IT, Office Equipment and Value Added Services: “Retailers introduced new computing devices priced in the R3000 band during the quarter and enjoyed surprisingly strong demand for these entry-level units.

“Telcos enjoyed robust growth in mobile computing retail sales, thanks to credit deals, subsidised contracts and attractive data offers. However, South African consumers are heavily indebted, which may dampen growth for the rest of the year.”

With consumers rapidly migrating to smartphones, sales of traditional mobile phones continued to decline, down 1.6% year-on-year to around 2 million for the quarter. However, the exchange rate and the introduction of higher-priced brands helped to drive a 8.9% year-on-year revenue increase in mobile phone revenues during the period under review.

This follows the 21% drop in mobile phone unit sales in the first quarter of 2016 compared to the same period in 2015. “Operators continue to lead the transition from feature phones to smartphones as they pursue higher data revenues,” says Muzhona. “The entry-level market for smartphones is fiercely competitive, and the minimum specs of lower cost smartphones is improving all the time.”

GfK South Africa expects the migration from mobile phones to smartphones to accelerate in 2018. However, it remains to be seen if the introduction of 4G-enabled, Voice-over-LTE-ready feature phones will have any impact on the South African mobile phone market.

Sectors of the consumer electronic market that showed strong growth for the first quarter of 2018 include loudspeakers—revenues up 21.6% year-on-year, thanks to demand of Bluetooth-enabled product—and ultrahigh definition (UHD) panel TVs—where revenues grew 33%, thanks to the growing affordability of the technology. UHD unit shipments were up 76%, while the average selling price of the products fell 24%.

Other market highlights for the first quarter of 2018 include:

  • Photo category revenues were up 8.1% year-on-year.
  • Small domestic appliance revenues grew 8%, following a 10.3% decline in Q1 2016 over Q1 2015. Hot air fryers sold well, as did kettles and toasters.
  • Major domestic appliances showed small year-on-year growth over Q1 2016, despite a decline in average selling price in many sub-categories of this market. Cooling products continued to make the highest contribution to growth in this segment.
  • Office Equipment revenues declined 18% year-on-year, led downwards by lower printer and cartridge sales volumes.

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