Smartphone industry: Market getting smarter post spectrum auction

Stakeholders say demand rises after arrival of 3G, 4G/LTE services.

KARACHI: In what reflects a growing demand, conventional retailers and ecommerce portals have witnessed a significant jump in their smartphone sales in recent months. The retailers attribute the surge to the launch of third-generation (3G) and 4G mobile broadband services.

Though the smart device market was already growing, industry sources said the recent launch of Long Term Evolution (LTE) or 4G services by China Mobile (Zong) and Warid Telecom further triggered sales as the number of people demanding and buying LTE-enabled handsets were increasing.



“If we look at our post-3G statistics, there has been a significant jump in the sale of smartphones,” said Saad Jangda, founder of Symbios.pk, one of the country’s major ecommerce portals.

The smartphone market had been growing for the last three years mainly because of Wifi services, said Jangda, adding that some vendors were selling 3G-enabled phones even before the auction. However, the demand for LTE phones increased significantly after Warid announced to launch its 4G services three months ago, according to Jangda.

“About half of our customers who have LTE handsets were on Warid’s network,” said Jangda, without sharing the exact numbers.

Though official data gives some idea about the increasing number of 3G users, it is not updated to reflect the current user base of the 4G network.

Cellular mobile operators sold a combined total of 4.96 million 3G connections during the five-month period ending in November, 2014, but there were merely 1,500 LTE or 4G subscribers. This is partly because 4G services were just launched around the same time.

“There are about 30,000 to 50,000 LTE subscribers as of now,” said an official who requested anonymity – stating the figure as an unofficial estimate.

Even the data compiled by the Pakistan Bureau of Statistics does not break down mobile phone imports by volume or type. However, it reflects the recent increase in shipments.

The country’s mobile phone imports increased to $283 million during the five-month period ending in November, 2014, translating to a year-on-year increase of 6.15% compared to $266 million of the corresponding period of last year.

However, industry sources estimate that the country imports around 2 to 3 million handsets every month. According to them, smartphones account for more than 20% of the total shipment and this may increase with greater penetration of 3G and LTE services.

“Customers demanding LTE handsets is the latest market trend, something that didn’t exist six months ago,” said Arsalan Siddiqui, a mobile phone retailer at Feroz Electronic Market, Saddar – Karachi’s largest mobile phone market situated in the heart of the city’s commercial hub.

Siddiqi added it was not only LTE handsets since sales were growing in general, a view echoed by Kashif Faridi, another retailer in the same market. “The market is not just constricted to top-of-the-line phones,” said Faridi. “The sheer size of the market produces customers for every phone.”

Revealing details about current trends, retailers at Karachi’s electronic market said a bulk of the sales came from low-end devices with prices ranging from Rs10,000 to Rs20,000. Even new players, such as Lenovo, have earned a fair share in the market, they say.

“Our high-end phones are mostly sold to the corporate clients,” said Siddiqi.

“But low-end mobile phones and local brands – such as Qmobile, Huawei, Voice and G5 to name a few – are selling like a hot cake, while Samsung, Sony and Apple are the main players of the high-end market – a global statistic.”

While electronic market is dominated by mid to low price mobile phones, online retailers say their smartphone sales have gone up mainly in branded category.

Those interested in buying new handsets are shifting to online purchase, according Shayaan Tahir of Homeshopping.pk, a major ecommerce player in Pakistan.

“The number of people who accessed our website through mobile phones increased from 20% of the total traffic to the current 35% in three months,” he said.

Tahir, however, added their customers are different from those who visit conventional markets that also deal in used handsets. Responding to a question, he said it was hard to estimate the size of the actual smartphone market or the actual growth in its size because of a huge grey market of used phones.

In fact, the growing market of smartphones including the grey business is only a small chunk of the country’s overall mobile phone market, according to Samsung Pakistan Head of Corporate Marketing Saadul Hassan.

Our basic phones, including those that sell for $20 are still selling very well because 70% of our mobile phone market is outside Karachi, Lahore and Islamabad,” said Hassan.

THE WRITER IS A STAFF CORRESPONDENT 

Published in The Express Tribune, January 19^th,  2015.

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