South Africa's smartphone market saw shipments decline 22.9% quarter on quarter (QoQ) in Q1 2020, according to the latest insights from global technology research and consulting firm International Data Corporation (IDC). While shipments are traditionally weaker in Q1 than in Q4, the major reason behind the under-performance of the market was the impact of the global COVID-19 pandemic.

The COVID-19 outbreak halted production in China, with the resultant supply shortages effectively severing smartphone shipments into the South African in Q1 2020.

"The country's poor QoQ performance was due to delays in shipments of mobile phone devices into the country," says Arnold Ponela, a research analyst at IDC. "Economic activity is usually slow in the first quarter of the year, but this was exacerbated by uncertainties caused by the COVID-19 crisis. With the negative impact of the pandemic on the economy, consumer demand declined substantially and channel activity was restricted due to lockdown measures and security issues."

Despite all these challenges around supply and demand, Samsung continues to top the smartphone space in terms of overall smartphone shipments, accounting for 29.9% of the market's units in Q1 2020. Samsung's lead was driven by the launch of various new affordable and feature-rich models such as its new A series and S series range. Mobicel (17.7%) and Huawei (15.9%) followed in second and third place, respectively.

Looking ahead, IDC expects South Africa's overall mobile phone market to experience a further double-digit decline in Q2 2020 caused by COVID-19 lockdowns and restrictions. "Consumer demand will be severely affected, with the majority of consumer budgets being directed towards essential consumption," says Ramazan Yavuz, a senior research manager at IDC. "Throughout 2020, the fallout from the COVID-19 crisis will compound South Africa's existing local and macroeconomic challenges. As such, we expect smartphone shipments to the country to decline 6.1% year on year for 2020 as a whole."

Mild decline in Egypt

Egypt's smartphone market experienced one of the smallest declines in the whole Middle East and North Africa region in Q1 2020, according to the IDC.

The market research firm’s Worldwide Mobile Phone Tracker shows that smartphone shipments to the country declined 6.3% quarter on quarter (QoQ) in Q1 2020 to total 2.82 million units, making up 75.0% of overall mobile phone shipments for the quarter.

The global COVID-19 pandemic has impacted Egypt's smartphone market in two phases — first through disruptions to supplies from China, and then through weakened consumer demand from the middle of March.

Looking at the vendor landscape, Oppo led the country's smartphone market in terms of shipments in Q1 2020, followed closely by Samsung. Xiaomi and realme are focused on increasing the market shares they gained over the course of 2019.

"The established Chinese vendors like Transsion (i.e., Infinix, Tecno, and Itel) and Huawei are challenged by supply-chain disruptions and an influx of more affordable models from the competition," says Taher Abdel Hameed, a senior research analyst at IDC. "However, the fallout from COVID-19 will cause hardships even for the fast-growing brands throughout the remainder of 2020 and will force them to adjust their pricing and model portfolio strategies."

Looking ahead, a steeper decline is forecast for Q2 2020, with most mobile phone stores operating at 50% capacity due to lockdown measures and curfews. "Despite a general slowdown in consumer demand and a slow second quarter, Egypt is the region's best candidate to turn to a fast recovery track," says Yavuz. "Overall, the Egyptian market is expected to have a positive economic outlook for 2020 and will heal fast from COVID-19 crisis."

COVID-19 impact on Nigeria

Nigeria's feature phone market suffered a 12.5% quarter-on-quarter (QoQ) decline in shipments in Q1 2020.

Research shows that smartphone shipments declined 13.6% over the same period, with demand for both types of devices hit by cautious market sentiment in the wake of the COVID-19 pandemic. From a supply perspective, the December 2019 pre-orders combined with existing inventory to cushion the market from any severe shortages in Q1 2020.

The IDC adds that feature phones remain a major part of Nigeria's mobile phone ecosystem, accounting for 56.0% share of all devices shipped in Q1 2020. Feature phones are preferred as secondary phones since they offer longer battery life, radio, and network access in rural areas where 4G infrastructure is underdeveloped.

The major players in the country's feature phone space in Q1 2020 were Tecno with 46.6% unit share, Itel with 30.8%, Nokia with 13.0%, and Bontel with 6.9%.

“The market's Chinese players continued with aggressive marketing and branding activities that helped them to retain notable market shares despite the supply issues thrown up by the pandemic. Transsion brands (i.e., Tecno, Itel, and Infinix) dominated the smartphone space in Q1 2020, accounting for 76.8% of all shipments for the quarter. Samsung held the second-biggest unit share at 7.2%, while Xiaomi and Huawei followed with respective shares of 4.9% and 3.2%,” the IDC states.

George Mbuthia, a research analyst with IDC, says, "The Chinese brands continue to offer more models in the entry-level and mid-range price bands, with devices going for less than $200. Competition is a major driver of this downward trend in average selling prices, a trend that has catalysed smartphone adoption in the market. Despite seeing its share drop by 3%, Transsion's Tecno brand continued to lead the way in Q1 2020, with its Spark 4 and Camon 12 models proving popular. Samsung also remained competitive in Q1 2020 as its A-series models offer superior specifications and are affordable for most consumers."

Looking ahead, IDC expects the Nigerian market to see a further 15.7% QoQ decline in overall mobile phone shipments in Q2 2020 as the lockdown of major businesses that started March 26th and further measures aimed at curbing the spread of COVID-19 continue to have a negative impact.

"Distributors remain reluctant to keep large inventories as they look to avoid bonding more capital amid an economic slowdown with a fluctuating Naira and declining oil prices," says Yavuz. "The lockdown has also led to loss of income on the consumer side, which will translate into low spend on mobile phones."