Apple has just thrown down the gauntlet to Samsung, showing its intention to fight for the mid -range priced smart phone market cornered by the South Korean company in Africa and the Middle East.
On Monday, the American tech giant unveiled a range of smaller and cheaper iPhones with a starting price of $399, well below the standard $649 for top iPhone model, marking its entrance into Samsung’s forte.
To industry watchers, the move represents a seismic shift in Apple’s strategy, fermenting a silent rumble in the sector. This is because Apple is perceived as the Tom Ford of the phone industry, whose products convey style and symbol, a statement of excellence and elegance, priced beyond the means of many consumers, particularly in Africa.
Apple is all about premium, analysts say, and never strove to achieve Samsung’s omnipresence, rather targeting richer nations in North America, Europe and Asia, raking in tons of money as it became the Most valuable company in the world.
So why did Apple change course targeting markets like Africa? Industry watchers point to slow growth in Apple’s traditional domain which has been keenly contested by Android phone makers championed by Samsung. “With heavy saturation in many mature smart phone markets such as the U.S., Europe, and China, many vendors have placed a renewed focus on pushing premium-looking mid-range devices as a new value proposition to consumers in both developed and emerging markets,” says Anthony Scarsella, Research Manager, International Data Corporation, IDC’s Worldwide Quarterly Mobile Phone Tracker.
Africa’s Smart Phone Market Dominated by Android and Samsung
Since the beginning of this decade, Africa’s smart phone market has grown in leaps and bounds, as the continent’s growing middle class switched from feature phones to smart sets. Even so, Apple largely ignored the continent preferring the richer markets of the West and Asia.
Samsung, on the other hand embraced it, designing ranges of handsets that catered to African needs. The South Korean manufacturer was one of the few electronics companies that had a strategy for the continent, setting up call centers where staff spoke a number of African languages. This strategy paid off for Samsung as it now dominates the mid range smart phone market in Africa that Apple wants a bite off.
Smart phone sale in the continent is expected to hit 200 million next year, and a large chunk of it would be android ware. Android hardware remains the undisputed king in Africa. According to IDC, 89 percent of smart phones shipped in Africa during the first quarter of 2015 were powered by Android, while Apple’s ios accounted for a mere 7 percent, the remaining 4 per cent was shared by other phone operating software including Windows and Blackberry. The IDC also notes that Samsung has a 50 percent hold of all the smart phone sales on the continent. Analysts, therefore, envisage a serious fight for Apple if it wants to eat into Samsung’s share.
$100 Handset is a Price Below the Belt for Apple
Africa’s smart phone sale is still largely driven by $100 devices mostly supplied by Chinese makers, contributing to the strong growth in the region. Almost half of all the smart phones shipped across Africa in the first quarter of 2015 were priced below $100, while almost 75% fall under $200 according to IDC. ”Phones priced above the $450 price band has seen its share fall from 25% in Africa to 14% today,” it said.
Due to its long stay in Africa, Samsung has learnt to supply smart phones across all the price range, from the $100 low range to its flagship handset priced above $600. While Apple has no low price range handset, its mid range set of $400 is still too high for most African consumers who have to purchase such outrightly and cannot rely on network provider for financing.
The pre-paid mobile market model dominates most African countries, which might work against Apple’s entrance into the mid range market segment dominated by Samsung.
And so, in Africa, Apple finds that the boot is on the other foot, just as it was for Samsung in the United States, years ago.