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Smartphone sales climb in South Africa

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Smartphone unit sales in South Africa climbed by around 21% in 2017, even as South Africans reduced their spending in most categories of the consumer technology market, according to point of sale data from market research firm, GfK South Africa.

Storage, media streaming device, and speaker retail sales also saw healthy growth last year, while tablet computer, desktop computer and mobile computer sales experienced sharp declines.

GfK South Africa’s data shows that smartphone sales in South Africa climbed from around 10 million in 2016 to over 12 million in 2017. Even though much of this growth was driven by adoption of entry-level smartphones from second-tier brands, the value of the smartphone market showed an increase of 22%. Sales of basic mobile phones dropped 11% in 2017, as users continued to migrate to smartphones.

“Electronics, telecommunications and information technology retail experienced a difficult year in 2017 as consumers tightened their belts in response to economic difficulties in South Africa,” says Nikolay Dolgov, General Manager of Point of Sales Tracking at GfK South Africa. “However, the smartphone market continued to show strong growth as more South Africans sought to get connected to the Internet and as smartphone prices continued to fall.”

Quarterly sales of mobile devices reached record levels in the fourth quarter of 2017, largely driven by Black Friday retail specials in November and robust sales during the December festive season. In addition to entry-level smartphones, the large-screen ‘phablet’ form factor also experienced significant growth.

“Consumers are looking for special deals and promotions when they’re ready to upgrade their devices,” says Norman Chauke, Solutions Specialist at GfK South Africa. “What’s more, we’re seeing the pace of the transition from basic phones to smartphones accelerate as the price gap between them narrows. Operators are nudging subscribers towards smart devices as they seek to grow their data revenues.”

Sales in the information technology segment – including tablets, desktops and mobile computers – declined by 25% in 2017. The sharp drop is largely due to a continued deterioration in sales of media tablets, with unit sales falling more than 40% to less than 1 million units. Large-screen smartphones are cannibalising tablet sales as users choose to buy a better smartphone rather than a new tablet.

Mobile computer sales dipped by more than 15% and desktop fell 29% as consumers held off upgrading as a volatile exchange rate continued to affect pricing. Desktop and mobile computer manufacturers continue to address weak sales of their devices by selling more affordable, lower-specced machines with older generation processors, less RAM and smaller screen sizes.

Storage saw good growth in 2017, with increasing shipments of mobile computers with SSD hard drives that have low storage capacities driving growth for external storage.

“Though low-end platforms such as the Celeron account for more than half of the market, sales of premium devices based on Core i5 and Core i7 grew during 2017,” says Chauke. “In line with established trends in market, we are seeing tech-savvy online shoppers, in particular, gravitate towards premium mobile computers.”

Turning to the consumer electronics market, panel television sales were strong in the fourth quarter of 2017, largely thanks to good sales during the week of Black Friday in November. Consumers snapped up large-screen TVs and premium models over the Black Friday period, translating into a healthy and high average price. Despite strong Black Friday sales, the panel TV market for the full 2017 year was flat.

Ultrahigh definition, 55 inch screens showed a significant decline in sales. Despite a negative growth for the consumer electronics segment, loudspeakers reached a record high in sales value during the fourth quarter of 2017. Audio home system sales, however, dropped significantly during the quarter.

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Personal computing devices sales still decline in MEA

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The Middle East and Africa (MEA) personal computing devices (PCD) market, which is made up of desktops, notebooks, workstations, and tablets, suffered a decline of -7.3% year on year in Q2 2017, according to the latest insights from International Data Corporation (IDC).

The global technology research and consulting firm’s Quarterly PCD Tracker for Q2 2017 shows that PCD shipments fell to around 6 million units for the quarter.

“As forecast, the market followed a similar pattern to recent quarters, with the downturn primarily stemming from a decline in shipments of slate tablets and desktops,” says Fouad Charakla, IDC’s senior research manager for client devices in the Middle East, Turkey, and Africa. “This was the result of desktop users increasingly switching to mobile devices such as notebooks or even refurbished notebooks, while users of slate tablets shifted to smartphones. These trends translated into year-on-year declines of -21.9% for desktops and -15.7% for slate tablets in Q2 2017, while shipments of notebooks and detachable tablets increased 11.0% and 63.3%, respectively over the same period.”

“Market sentiment in the region remained low overall, although an aggressive push from some slate tablet vendors meant the market declined much slower than expected,” continues Charakla. “At the same time, heightened competition has also made it harder for certain players to sustain their slate tablet businesses and generate profits, causing them to lose interest in the slate tablet market altogether. Despite this, slate tablets are still the most popular computing device among home users in the region.”

Looking at the region’s key markets, IDC’s research shows that when compared to Q2 2016 overall PCD shipments were down -11.4% in the UAE, -8.9% in Turkey, and -6.7% in the ‘Rest of Middle East’ sub-region (comprising Iran, Iraq, Syria, Yemen, Palestine, and Afghanistan). South Africa and Saudi Arabia bucked this trend, recording year-on-year increases of 3.5% and 9.6%, respectively.

A massive education delivery in Pakistan acted as a key driver for notebook shipments in the region overall. Similarly, the education sector was the biggest driver of detachable tablet shipments, triggered by a huge delivery in Kenya, as well as two other deliveries in Pakistan and Turkey, which enabled this category to achieve the fastest growth of all the PCD categories.

“While a component shortage prevented market players from reducing their prices too much, the average price of consumer notebooks experienced a considerable year-on-year decline in Q2 2017,” says Charakla. “This played a key role in driving demand from the consumer segment, and was reflected in the growing popularity of lower-priced notebook models.”

Looking at the PC market’s vendor rankings, each of the top five vendors maintained their respective positions compared to the previous quarter, with the top four all gaining share.

Middle East & Africa PC Market Vendor Shares – Q2 2016 vs. Q2 2017

Brand Q2 2016 Q2 2017
HP Inc. 23.7% 27.6%
Lenovo 19.8% 21.5%
Dell 16.3% 16.7%
ASUS 8.7% 9.4%
Acer Group 5.9% 4.1%
Others 25.7% 20.7%

Although Samsung continued to lead the tablet market, the vendor rankings in the space saw quite a few changes, with Huawei catapulting itself to second place. Lenovo also climbed up a position compared to the previous quarter, causing Apple to drop to fourth place.

Middle East & Africa Tablet Market Vendor Shares – Q2 2016 vs. Q2 2017

Brand Q2 2016 Q2 2017
Samsung 20.5% 18.9%
Huawei 11.2% 15.8%
Lenovo 12.7% 9.8%
Apple 9.1% 8.8%
Alcatel 2.9% 5.0%
Others 43.5% 41.7%

“Looking to the future, the MEA PCD market is expected to decline at a faster rate than previously forecast for 2017 as a whole,” says Charakla. “Technological shifts are playing a pivotal role in deciding the future of this market, with demand for certain products shifting to other PCD products and beyond (i.e., smartphones). Accordingly, shipments of slate tablets are expected to continue declining over the coming years as demand is cannibalized by smartphones. Meanwhile, the ongoing shift to mobile computing will see growth in the desktop market remain close to flat throughout IDC’s forecast period ending 2021. Notebook shipments will experience very slow growth beyond 2018, while detachable tablets will remain the fastest growing PCD category, eating away share from other computing devices.”

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Gazer cyber-spies exposed

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ESET has released new research into the activities of the Turla cyberespionage group, and specifically a previously undocumented backdoor that has been used to spy on consulates and embassies worldwide.

ESET’s research team are the first in the world to document the advanced backdoor malware, which they have named “Gazer”, despite evidence that it has been actively deployed in targeted attacks against governments and diplomats since at least 2016.

Gazer’s success can be explained by the advanced methods it uses to spy on its intended targets, and its ability to remain persistent on infected devices, embedding itself out of sight on victim’s computers in an attempt to steal information for a long period of time.

ESET researchers have discovered that Gazer has managed to infect a number of computers around the world, with the most victims being located in Europe. Curiously, ESET’s examination of a variety of different espionage campaigns which used Gazer has identified that the main target appears to have been Southeastern Europe as well as countries in the former Soviet Union Republic.

The attacks show all the hallmarks of past campaigns launched by the Turla hacking group, namely:

  • Targeted organisations are embassies and ministries;
  • Spearphishing delivers a first-stage backdoor such as Skipper;
  • A second stealthier backdoor (Gazer in this instance, but past examples have included Carbon and Kazuar) is put in place;
  • The second-stage backdoor receives encrypted instructions from the gang via C&C servers, using compromised, kegitimate websites as a proxy.

Another notable similarity between Gazer and past creations of the Turla cyberespionage group become obvious when the malware is analysed. Gazer makes extra efforts to evade detection by changing strings within its code, randomizing markers, and wiping files securely.

In the most recent example of the Gazer backdoor malware found by ESET’s research team, clear evidence was seen that someone had modified most of its strings, and inserted phrases related to video games throughout its code.

Don’t be fooled by the sense of humour that the Turla hacking group are showing here, falling foul of computer criminals is no laughing manner.

All organisations, whether governmental, diplomatic, law enforcement, or in traditional business, need to take today’s sophisticated threats serious and adopt a layered defence to reduce the chances of a security breach.

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