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TMCNet:  Ethiopia Looking to Get Smart

[April 22, 2014]

Ethiopia Looking to Get Smart

(AllAfrica Via Acquire Media NewsEdge) Executives of regional offices for multinationals are often reluctant to disclose figures on their sales and market shares. For those working for Samsung in the East African market, the case was no different. Probed at a press conference two weeks ago in Nairobi, Robert Ngeru, vice president of Samsung for East Central Africa, declined to disclose what percentage of the 200 million people who have bought smartphones in the Galaxy family, since its launch five years ago, are found in this region.


But he argued that eight out of 10 of smart phone users have handsets manufactured by his company. Ngeru quizzed the media representatives who met inside Safari Park Hotel in Nairobi, Kenya, to attend the launching of the Galaxy s5, on April 10, 2014 - the first global launch in the sub-region.

"How many of those from members of the press carry smartphones made by Samsung?" he quizzed.

It was a clever way of making his point. Indeed, 12 out of 18 had mobile devices made by Samsung, demonstrating the extent of the market penetration Samsung - a South Korean business conglomerate, valued in 2013 at 217 billion dollars - has in the region, which includes no less than 10 countries. Founded in 1938 as a trading house by Lee Byung-chull, Samsung (literally translated as three stars) is today a global giant with an involvement in a variety of sectors, from real estate to finance; the manufacturing of electronics to mobile devices, including tablets and smartphones.

Its smartphone market makes up the largest global share in units (32pc), followed by Apple Inc (12pc) - its archrival battling it not only in the stores, but also in American courtrooms over patent rights. Samsung sold 80.3 million smartphones in 2013, compared to Apple's 30.3 million iPhones, from a market size of 250.3 million, according to Gartner - an information technology research firm - in November 2013.

Not much of this galloping in the international market translated to a bottom line, however. The largest TV and mobile manufacturer declared last week that its operating profits for the second quarter of the current year (7.9 billion dollars) has dropped by four percent compared to the same period last year. This makes up part of a series of drops in profit.

Its managers hope that the launching of its fifth smart phone edition in the Galaxy S family will boost both sales and operating profits.

"The mobile industry continues to grow and expand," said Ngeru. "We come with this product after listening to what our customers say and we understand what they want." Samsung designers and engineers believe that their customers would want to buy a devise that is "simple, easy to understand, convenient and a fit to [their] lifestyle". Thus, the newly launched Galaxy s5 has arrived with a focus on improved camera pixels (16.1), a longer battery life, water resistance and additional security features with a fingerprint scanner. There are also software features added, including a heart-rate monitor and a corner for kids.

"Customers don't want complex products," said Sangbeak Kim, president of Samsung East Africa, whilst unveiling the new devices - s5, Gear 2 and Gear Fit - before 800 invited guests, who were treated to a spectacular performance that innovatively blended a stage act with a visual background. It superbly demonstrated Samsung's core message of its product's "durability, design and performance".

"They want a meaningful and relevant product to be applied in their daily lives," said Kim.

Despite comments from reviewers before the launch that the s5 was little different from its predecessor, the market seems to have vindicated Kim. Samsung has reported more sales of its latest smartphone than the s4 when it was launched in 125 countries across the world, on April 11.

Carphone Warehouse, a mobile retailer, reported last week that the Galaxy s5 had hit record high sales compared to its predecessor during the same month last year.

The attraction of the s5 is that it comes with certification of water and dust resistance, an integrated fingerprint sensor and heart rate monitor. But the real change comes in the enhancement Samsung has carried out in the camera capability, according to Yonathan Biniam, a local mobile devices retailer, with an insight into the local market.

"They have worked so hard on the camera to get it as good as a professional camera," he told Fortune.

On top of the upgraded megapixels, the camera in the Galaxy s5 has a revamped autofocus system, coupled with a two-megapixel front facing snapper.

"They don't usually make such a leap from device to device [on the hardware]," said Yonathan. "But Samsung offers free software worth 600 dollars." Yonathan points out the free annual subscription with Dropbox - an online software service providing storage for photos, documents and videos, with data storage up to 10GB.

Samsung managers for East Africa say they have more to offer in their marketing bid. Provided that consumers are buying from authorised distributors, their company is willing to guarantee a two-year warranty for damages to the screen and due to water, with two replacements. Ngeru described it as the "most exciting offer ever made" in the sub-region.

Samsung's long time authorised dealer in Ethiopia, Garad Plc, has ordered 3,400 s5 units, sources disclosed. The company's country office, housed inside a new building on Guinea Conakry Street., in front of Yordanos Hotel, has two "retail-tainment" outlets - inside Lex Plaza Building, on Haile Gebresellasie St and Zefmesh Grand Mall, near the Megenagna roundabout, both in partnership with Garad. These are outlets Samsung designed with the intention of making shopping for their devices an "exciting and enjoyable experience".

"We have plans to open more of these outlets in the future," Tadewos Awol, country manager for Samsung Electronics East Africa, disclosed to Fortune.

Nonetheless, Galaxy s5 has yet to arrive for sale in the local market. In the middle of last week, none of the stores operated by Garad carried this device.

"The local dealer is always too slow to put devices in the market," said a person who is involved in the domestic mobile devices market.

Tadewos, however, projects that the s5 will most likely arrive in Addis in three weeks, on sale for a unit retail price of between 12,000 Br to 15,000 Br.

Both his office and the authorised dealer are undercut by the contraband market, as the galaxy s5 is already available in local stores for 19,500 Br (975 dollars) - 200 dollars more than what the international market offers. These are devices brought into the country by individual travellers, most likely from the US and Europe, according to those familiar with the industry.

Tadewos, who has prior experience with Ethiopian Airlines and Coca Cola, recognises the flow of devices through the underground market as a "challenge".

"We can't stop the grey-trade on our own," he told Fortune. "It's beyond us. We are discussing with the government on how to address the issue." Yet, Ngeru sees a solution in Samsung's ability to customise devices relevant to the Ethiopian market, with software useful to users in Ethiopia and not available in those brought from foreign markets. The experiment is well underway in Kenya, a hub for Samsung's regional market, where it developed apps for lawyers and those interested in following cases in the judiciary.

Ngeru, formerly mobile division head of Microsoft and Motorola for East and Central Africa, believes that changing the game plan in the Ethiopian market rests on students currently training at the Institute of Technology, Addis Abeba University (AAU). It is they who will develop apps relevant to users here, as their Kenyan counterparts have done already. These will be available free on all Galaxy s5 units bought in the local market.

Copyright Addis Fortune. Distributed by AllAfrica Global Media (allAfrica.com).

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