Exploring the Life Cycle of the MEA Smartphone Market

As smartphone sales slip, Isaac Ngatia of IDC asks what next for the region’s mobile market

Tags: IDC Middle East and AfricaSaudi ArabiaUnited Arab Emirates
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Exploring the Life Cycle of the MEA Smartphone Market IDC says the smartphone market has reached saturation point. (IDC Mobile Phone Tracker)
By  Isaac Ngatia Published  May 7, 2018

Just a few years ago we never even considered doing anything beyond voice calls on our phones. But then came listening to music, browsing the Internet, checking emails, navigating car journeys, and engaging in mobile commerce. So many functionalities have converged on the mobile phone in recent years, making it the device of choice for both personal and business use.

In the last decade, the growth of the Middle East and Africa (MEA) mobile phone market has been phenomenal, driven primarily by the adoption of smartphones. However, the last two years have witnessed a slump in smartphone shipments within the MEA region, a scenario that reflects the global trend. Like other technology categories, the mobile phone market has reached maturity in key markets. So, what will drive and sustain the growth of this market in the future?

The next phase of growth will be driven by the innovative new ways we use our phones. And the more integrated they become with other connected devices, the more seamlessly integrated they will become with our day-to-day lives, fueling a much-anticipated new cycle of adoption.

At IDC, we expect the market to see three distinct areas of development. The first relates to the continuing provision of mobile phones for legacy services such as voice, messaging, and data services. These core elements will remain key, with price segmentation continuing to play a role in driving sales. This will also include better quality and optimized specs such as screen, camera, battery life, and so on.

Regional brands will provide stiff competition to the global brands on this front. And the provision of customized solutions to enhance the user experience around these basic services will be critical to pushing any brand across the region.

Localized solutions, such as local language, fonts, colors, and interfaces, will also be driving factors for legacy services. Regional brands may have an advantage in this regard as they are better positioned to understand local user needs, motivations, and habits, so the major international brands will need to ramp up investment in localizing their offerings.

The second area of growth concerns ecosystem. Vendors with a sustainable ecosystem will be in a better position to drive growth in the category. The ecosystem in this case does not only include the hardware and software, but also the channel, from production all the way to the end user. 

The growing focus on improving return on investment (ROI) rather than on expanding market share will see a decline in OEMs as players take a closer look at sustainable alternatives. This drive towards ROI has also led to less investments in volume as brands seek greater value.

The third area of growth relates to R&D-driven aspects, which will push innovation around emerging technologies. The inclusion of these technologies in smartphones will be a key differentiator for the market's next phase of growth. 

One example is artificial intelligence (AI), with devices evolving from being merely smart to intelligent.  The use of AI within mobile phones will center on learning and predictive capabilities, assisting users with their day-to-day activities and helping to overcome any challenges that may arise. 

AI capabilities are still in their infancy, and we are still a number of steps away from seeing mainstream usage in the region, especially on the enterprise front.  But as technologies such as AI continue to develop and innovation comes to the fore, these added capabilities will open up a whole new frontier.

Brands such as Apple and Huawei are leading the way, with augmented reality being embedded in their new and upcoming models. As the user experience of these digital services improves, the brands at the forefront of developing these technologies will not only lead the market but drive it as well.

The development of the supporting infrastructure such as 5G will also act as a catalyst for growth, so the development of devices with 5G capabilities will be key. Indeed, the importance of this infrastructure cannot be overstated as it will be a significant enabler of wider adoption and growth in the mobile space.

It is clear then that the new digital frontier will provide a wide array of areas that smartphones brands can pursue, particularly as smart homes and cars become part of the wider Internet of Things. The possibilities are literally endless, and while the stellar growth rates of previous years may not be attainable, the MEA smartphone market seems poised to enter a new phase of growth.

Isaac Ngatia is Senior Research Analyst, IDC CEMA.

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