Despite continued consumer pressure and an economic downturn, the fastest growth for handsets is in the premium segment where phones can go for as much as R30,000, the head of Samsung Mobile in SA says.
“The premium flagship product market in SA is thriving ... which is almost counterintuitive to the economic environment,” said Justin Hume, vice-president for mobile at Samsung SA on Monday. The segment — bolstered by the recent introduction of the company’s new Galaxy S23 range — is growing three times faster than other segments of the market.
The South Korean electronics company is the world’s largest smartphone maker, a position it has held for years, though US-based Apple and China’s Xiaomi have been working to disrupt that dominance.
Against the background of the global downturn and device shipments negatively affected by pandemic induced supply chain challenges, sales in the smartphone market fell 11.3% in 2022. A total of 1.21-billion units were shipped during the period, the lowest number since 2013, according to the International Data Corporation (IDC).
Samsung shipped 260.9-million smartphones in 2022, a decrease of about 4.1% over the 272.1-million units in 2021, though it increased its market share from 20% to 21.6%. Apple shipped 226.5-million units in 2022.
In SA, the story is the same with Statcounter Global Stats showing that Samsung held 49.08% of the local smartphone market as of January 2023.
Hume says the SA phone market is in excess of 20-million devices a year. This includes those using old technology such as 2G, with prices running from R200 to R600. “What we define as a true smartphone would be a 3G or 4G product up to a 5G network product and we operate a base platform on 4G.”
Unlike Apple, Samsung has smartphones from entry level to premium, with sales largely following the makeup of the economy, where most devices are still sold at the lower end of the market.
“You can think about it like a traditional pyramid in that there’s a lot of volume in the more entry-level products. And we think about the total addressable market by those different price segments.”
That said, the Samsung executive says the premium segment is the fastest growing for smartphones, driven by better connectivity, demand for higher quality video and photo content creation and a host of financing options.
“We first of all have this 5G network proliferation that is taking place, which is great. Content creation and content absorption is a very real thing and people demand high-end technology to get that.”
“That market is growing at about three times the rate of the average smartphone market at the moment. It is testament to the SA consumer who sees value in buying into high-end technology because they see the productivity benefit.”
Samsung has also introduced a number of financing options, such as its trade-in programmes as a way to entice consumers to buy more high-end devices. It allows customers to trade in an older phone model — based on a list of approved devices — “which could be cracked or damaged ... as long as it switches on without requiring a cable”. In exchange customers get R10,000 off the purchase price of a new Galaxy S23 smartphone.
“But even in the mid-tier market we’re also seeing financing options and instalment packages offered by mobile operators, giving great value,” said Hume.
Outside such financing, cash purchases of Samsung mobile handsets are increasing, though still making up a minority of purchases.
“Cash purchases and those wonderful customers who come into our stores and swipe their credit card ... that has doubled over the past 24 months, so it is quite an interesting dynamic,” he said.
“That contributes about 20% of purchases. The balance of the market is still done on a postpaid purchase, on a mobile contract, whether that is on a 24-month or 36-month basis.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.