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Huawei, Samsung lead smartphone boom

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The entry level smartphone market has experienced a significant spike since mid-2016, due largely to the affordability of devices that offer advanced features and capabilities.

This is according to statistics released by local online cellular contract comparison engine Phonefinder.co.za.

Founder and MD Lance Krom says smartphone manufacturers are now catering to the mass market with affordable devices that offer a quality of Internet and camera experience – the two most important features in this market segment, according to polling conducted by Phonefinder – that was previously only found in top-end smartphones.

“Traditionally this market segment has had to be content with prepaid airtime and feature phones due to the higher price tag of smartphones,” explains Krom. “However, as more manufacturers have entered the local market, particularly over the last four years, we’ve seen increased competition, both in terms of price and on smartphone features, which have improved exponentially.”

This has accelerated with the emergence of Chinese manufacturer Huawei as a trusted brand that offers quality hardware, particularly entry-level devices that boast similar capabilities to those of the incumbents.

“Since the peripherals like the camera and operating system, in the form of Android, have become largely commoditised across the big brands, and the addition of other key features such as larger memories, dual SIM options, and external slots, we’re starting to witness a massive shift in cellphone purchasing behaviour,” believes Krom.

“While most consumers in this market segment don’t have the financial ability to buy smartphones outright, the lower cost of these feature-packed devices means that contracts are now a viable alternative for those looking to upgrade from feature phones,” he adds. “The under-R200 per month category has therefore become the most popular contract marketed via the website, with the category experiencing a significant spike since 2016.”

With greater parity on device specs, Krom says brand loyalty is no longer the dominant factor when making a purchase decision.

“Users of the Phonefinder online service are primarily focused on price, which means they’re willing to switch between devices if the contract package is right, as witnessed by the spike we saw in Huawei devices in the second half of 2016.”

According to statistics released by Phonefinder for the last 12 months, Huawei briefly usurped Samsung’s dominant position as the most popular phone brand, accounting for up to 50% of all contracts purchased between August and December last year.

“The release of the Huawei G series and Lite series enabled the upwardly mobile emerging middle market to attain a really good smartphone at an affordable price, which is what we attribute this spike to,” adds Krom.

Since the start of 2017, however, Samsung’s J5 and Grand Prime Plus phones have helped it regain its dominant position among price-sensitive contract subscribers. “While these can technically be considered Samsung’s entry level models, the specs of the devices are excellent.”

Other popular devices, according to Phonefinder, include Sony’s Xperia range, the Xiaomi-MI4, and LG G4.

“Many networks are now also pushing older iPhones – fourth and fifth generation models – into the market at a lower cost, which is gaining traction among this highly aspirational market segment,” Krom adds. “In addition, networks have also introduced white-label smartphones to lower the device component of the contract cost and make it even more affordable and attractive than pre-paid.

“Above all else, though, our customers are price sensitive, which means it is the data and value adds of the contract deal that result in a sale, with only secondary importance given to the phone brand and model selected.”

Regardless of the reason, the spike is contract sales and website traffic to the Phonefinder site over the past 12 months points to a major shift happening in the market.

“More consumers are opting to move away from prepaid on feature phones as they’re finally able to afford smartphones, to benefit from everything this advanced technology has to offer, thanks to the boom in more affordable contract options,” Krom says.