Big tech, big pricetags, in 2023

The global consumer electronics industry is expected to hold steady in 2023, with South Africa and the rest of the continent also expected to maintain sales levels seen in the past year.

“After a difficult year, expectations for 2023 are more positive,” says Ines Haaga, expert for consumer technology and durables (T&D) at GfK, a global consumer data company. “GfK forecasts a stabilisation of the global revenue growth within the T&D market, standing in the low single digits.”

Africa and the Middle East saw sales in the category of $44-billion for the first ten months of 2022, a marginal 0.1% increase over the same period the previous year. However, given recessionary trends globally, and dollar strength versus local currencies, this is seen as strong performance.

It is driven by an ongoing appetite among consumers for high-tech gadgetry, but with an emphasis on lower cost. In Europe, Middle East and Africa, says GfK, premium brands saw an 11% fall last year.

Despite this, South Africa remains a ready market for top-of-the range products, even if these do not appeal to the mass market.

Michael van Lier, consumer electronics director at Samsung South Africa, says the TV market is a powerful indicator of this demand.

“For the past decade the total TV market sales have averaged at one million TVs annually [Just short of R8 billion]. Of this number, 10% in value (not units) comes from TVs priced at R25,000 and up, and 3% in value is made up of units priced at R42,000 and higher.”

As startling as this may be for consumers tightening their belts, one of the most expensive gadgets on the market, the Samsung Neo QLED 4K QN90, selling at R150,000 on a promotion discount, is a popular choice. Van Lier says it has a very specific value proposition.

“It is differentiated from other TVs in the market as it delivers a superior gaming experience, which is made possible by its Neo Quantum Processor. The picture quality is brilliant in every scene you watch due to Quantum Matrix technology, which allows for ultra-fine light control.  

“Sound experience is also enhanced with the benefit of Dolby Atmos. Thanks to Samsung SmartThings, our Neo QLED models also offer customers a smarter connected living home experience.”

The most expensive TVB from Samsung is the 98-inch 4K, which retails at R199,000. It is also available in an 8K model, but only on special order: it sells for a cool R1-million and it does sell.

“We saw an impressive uptake in 2022,” says Ven Lier. “In 2023, we are going even bigger and are excited for our local introduction of a best-in-class technology called Micro-LED, which will be launched in the first quarter of 2023. We will stock a 110-inch model, which will retail at R1,5-million. However, there is also a 126-inch model which will retail at R3-million.”

This showstopper he says, will also be available only on special order.

Samsung also sees continued demand for its high-end smartphones. According to Justin Hume, vice-president for Mobile at Samsung South Africa, the Ultra-Premium market, which it defines as handsets costing more than US$1,000, grew by 5% in January to September last year, over the same period in 2021, to a total of 422,000 units. In what Samsung calls the combined Flagship segment, phones costing more than $600, the Ultra-Premium phones represented 65% of the total unit sales.

“The Ultra Premium market is expected to continue to grow by 8% in 2023,” says Hume. “During these times of economic headwind, the higher net worth market segment maintains credit worthiness with mobile operators (with) sustained upgrading.”

A case in point is the current Samsung flagship range, the S22, which comprises a basic model, a Plus and an Ultra, ranging in price from R19,000 for the S22 to R29,000 for the Ultra.  

“In 2022, the S22 Ultra accounted for 56% of the S22 Series, showing the demand for higher specification devices, particularly driven by the S-Pen function and powerful camera functionality,” says Hume. “Additionally, our 4th generation Foldable series continued to find a growing audience who identify with both compactability and functionality.”

At the other end of the scale, affordability and high-tech are becoming a major driver of sales. TCL, the world’s third biggest TV manufacturer after Samsung and LG, has made a strong foray into its own branded low-cost smartphones, after some years of manufacturing phones for the likes of Alcatel and BlackBerry.

Last year, it launched one of the lowest-cost 5G phones in South Africa, the TCL 20R 5G, retailing at R3,899. Sales figures aren’t in, says Ernst Wittmann, TCL Communication regional manager for Southern and East Africa, but the trends are clear: “We can confidently say that consumers are doing their homework and the affordability factor is more key than ever before. TCL believes that products like the 20R are the perfect blend of latest technology at an affordable price.

“Affordable high-tech devices will be in demand in the future as consumers become more cautious with their spending, which will see more opportunities for all manufacturers.”

Samsung will not be ignoring this target market, says Van Lier.

“A trend that will come to the forefront is providing more high quality, reliable products to next generation consumers. With the predicted rapid growth of Gen Z spending power, Samsung will offer more and more innovative offerings targeting different life stages, so that consumers can build flexible ecosystems within their households.”

* A version of this story first appeared in the Sunday Times.