The more operators try to establish their own brands and take a larger amount of value out of the smartphone user base, the more vendors will look for other channels too. Android has pushed this trend, although not as quickly as Google would have liked ‘ its own direct-to-consumer efforts for Nexus have, in the past, alienated powerful cellcos while having limited impact on customers compared to Android smartphones distributed via operators with their subsidies and financing schemes.
However, everything is up for grabs in emerging markets, and here some of the OEMs aim to reduce their reliance on the cellco channel. Lenovo, for instance, will introduce its first smartphones in Africa this year, initially in Nigeria. It is particularly keen on countries where it can bypass cellcos and sell directly to consumers, establishing its own brand and improving its margins and its market control.
Africa regional manager Graham Braum told Bloomberg that the firm had chosen Nigeria as a launchpad, rather than the larger and more mature South African economy, because in the former, it is less necessary to work with local operators. ‘Nigeria is coming toward the end of the year and then we will investigate the rest of Africa. We’re trying to sell off the shelf. We’ve picked the open market.’
This selling pattern in Nigeria is likely to prove attractive ‘ along with the country’s huge population and growing mobile broadband base ‘ to many players. Lenovo says that, in South Africa, 99% of sales are done through operators and that adds to the handset maker’s costs and complexity. Braum said: ‘That’s a lot of work to do to launch in a telco-based economy. Lead time is up to nine months to do all the planning, certification and you cannot align with one network.’
Nigeria has the highest population in Africa, at over 160m, and had about 113m wireless users at the end of last year, but only 5.6m smartphone owners. That figure should rise to 35m by the end of 2017, according to Informa forecasts, driven by falling prices and increasing 3G availability ‘ and the start of LTE build-outs in cities.
Lenovo plans to push a wide range of devices into Nigeria, in as many as six price bands. It will not just go after the budget market, where it will be fighting against products like Nokia’s sub-$100 Asha ‘smart featurephones’. It will also launch a model price at about $500 ‘ possibly risky in a market where there are virtually no subsidies, but reflecting the rise of the middle class in the country. After Nigeria, the next African target is likely to be Egypt, which has a population of 84m and is also an ‘open market’ which is not controlled entirely by cellcos.