How Samsung is dropping the ball in the Nigerian smartphone market

Samsung are the guys behind the wonderful high-end Galaxy S and Galaxy Note series that have captured the hearts and minds of fans worldwide. We can not doubt the quality or price of their devices at the high-end segment. Judging from their performances, features, warranties and guarantees, you’re getting every penny of what you pay for when you buy those flagship devices.

Samsung have made a name for themselves in Nigeria. People associate the brand and their devices as premium. They’re literally the pinnacle of Android devices in Nigeria and worldwide. Samsung is top dog at the top, and in turn, the sometimes the gullible public associate any Samsung device to be good – after all it is Samsung. But more and more, users are catching on, and it is reflecting in their purchasing choices.

Samsung has been too relaxed at the low end, releasing devices with mediocre specs at higher prices. And the likes of TECNO, Innjoo, Infinix, Gionee are eating the Samsung cake not just in Nigeria, but in many parts of the world, especially in the criteria of value-for-money at the bottom of the pyramid. In Ghana, for example, TECNO has the smartphone market cornered. Samsung is third in line.

This is 2015 and Samsung is still releasing a device like the Samsung J1 with 512 MB RAM!! What the!! To be sure, other big name brands are just as guilty. Sony is a case in point. They don’t get it, or they are unable to make the change. Competing brands are churning out devices with quad-core processors and 1GB RAM at similar price points. That is much better performance. Guess where the consumer’s cash goes.

Jumia Megathon Deals

An example I will present was what happened during the recent Jumia Mobile Megathon. I was impressed with every other manufacturer that participated – even Apple that is much maligned as stingy and elitist gave away their expensive devices for 50% off. The screenshot above is the device Samsung gave away in the Megathon deal. The Samsung Galaxy Star 2 Plus has no 3G, carries just 512 MB RAM and 4GB internal memory for 17k. Beside the Samsung, we had an Innjoo with 2GB RAM, 16 GB internal memory, and far better specs.

Who in his right mind would have bought the Star Plus 2 where there were other much better performing devices going for the same price? SMH.

Samsung Galaxy Star 2 Plus

Samsung needs to wake up and step up. They either shelve their low end devices or get on with the revolution in that segment of the market. Consumers have plenty of other options already should they not. As Mister Mo says, the battle in emerging markets will be won and lost at the bottom of the pyramid.

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  1. The major competitor for Samsung in the smartphone arena is Apple. Apple is making tonnes of money by focusing at the top of the pyramid and nothing else.

    Therefore, if you want to be rich like Apple, study Apple and do what Apple does.

    How much profit can you make selling a 25k device like the Infinix? Hot Note? You would need to sell a trailerload to make any profit that matters to investors, and Samsung is obviously not interested in kobo kobo business.

    And who says the battle in whatever market would be won at the bottom of the pyramid? Depends on whether you are merely targeting sales figures (which don’t mean much, unless you just want to brag, like Android) , or actual profit (the real deal) .

    1. Samsung is obviously not interested in kobo kobo business.

      Then they should take their phones else where. The earlier they understand Nigeria is a developing market the better for them. Not everyone can Shell out 150k on a smartphone.

      How much profit can you make selling a 25k device like the Infinix? Hot Note?

      By my calculations , a phone like Hote Note will probably cost 15k to produce. 5k might go into importing / paying markerters. infinix will probably make 5k profit per sale. Hote note has already sold over 100,000 copies. 5,000 x 100,000 = 500,000,000 Naira. (i stand to be corrected).

      isnt that enough profit for a company that started out in 2009?

  2. Someone should just advice them to stay away from the low end cuz Infinix, tecno and their group will make life unbearable for them there.

    It’s just that most people assume that being a Samsung, it has to better than the Chinese guys, apart from that, I don’t think anyone will purchase a low end Samsung.

  3. Kelvin, your production cost estimate can’t be correct. you’re also assuming that the retail price is the amount the company gets for the device which is impossible unless they sell directly (which they don’t). I’d be very surprised if they were making more than 2-3% on each device. compare that to the 25-30% margin in the premium segment. the math is simple, the cake is in the premium/midrange market, the crumbs are in the budget segment. even the newer OEMs from the Chinese Mainland tactfully ignore the sub $100 market after they’ve gained mind/market share.

  4. Kelvin, how can you assume that a phone Like the Infinix Hot Note would cost N15K to produce? $70 to $75?

    We know Innjoo sells close to cost price and I would bet my bottom naira that the other low end brands are doing similar.

    Clearly,, 100,000 units sold at such ultra low profit level is nothing a Samsung would be interested in.

    Yes, I think Samsung should just forget about the scrounging at the bottom of the ladder ..it’s simply not worth their while.

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