Smartphone industry earns $380b revenue in 2014

Smatphones• 8b new mobile devices to hit market in five years
• Over 4m phones enter Nigeria monthly

WITH smartphones coupled with mobile services and apps (mobile ecosystem) becoming the protagonists of the latest disruption tide in the technology space for well over a decade now, players in the sector may have earned over $380 billion in revenue in 2014 with over 1.2 billion units sold.

According to the International Data Corporation (IDC), the market is expected to grow to $451 billion yearly by 2018.

Besides, a Qualcomm report projected that about eight billion smartphones will still hit the market in the next five years.

Though, smartphone penetration in Nigeria, according to the Executive Vice Chairman of the Nigerian Communications Commission (NCC), Dr. Eugene Juwah, is still around 12 per cent penetration, reports have it that over four million mobile phone units enter Nigeria monthly. An unconfirmed report however, disclosed that about 24 million units of smartphones were sold in Nigeria in 2014.

Meanwhile, GfK, a German based research outfit, at the recently held IFA global press conference on Consumer Electronics, at St. Juians, Malta, said globally, 2015 will be driven by smartphone sales and launch of new technologies.

Global Director, Consumer Electronics, GfK, Jurgen Boyny, who said players including Apple, Samsung, HTC, Nokia, Lenovo, among others are expected to earn collectively about $1.4 billion from several purchases across the globe, noted that spending on digital devices will be positive, adding that there will be innovations around consumer electronics, telecommunications, infotech and domestic appliance.

Boyny said emerging Asia will lead regions in the digital world with 27 per cent spending spree, while Middle East and Africa, with emphasis on Nigeria will witness about 8.5 per cent spending on smartphones.

But, an investment firm, Cannacord Genuity, believed that the smartphone market has reached maturity, and year-over-year growth is declining gradually, with manufacturers working with cut-throat margins and one single player monopolizing gains, seizing an estimated 93 percent of industry profits.

In other words, it noted that with smartphone penetration well over 70 per cent in more developed countries like the U.S., the saturation point was exceeded a long time ago, and the eight billion in shipments to happen in the next five years will be driven by emerging markets.

According to it, the move to less penetrated explains why Chinese smartphone giant Xiaomi is now valued at $45 billion and expected to pursue an IPO. It also explained shorter product life cycles with little incremental innovation, and that implies less profit, reason Apple is moving quickly into wearables with the Apple Watch.

Qualcomm CEO, Steve Mollenkopf, at Qualcomm’s Uplinq developer conference in San Francisco, USA, said there will be eight billion new smartphones in the world over the next five years, adding that in 2015, there are now more than  one billion smartphones in the market that use Qualcomm’s Snapdragon processor.

Today, the Nigerian market has over 70 per cent foreign domination by Original Equipment Manufacturers (OEMs) in hardware products including Personal Computers, laptops, and mobile phones.

The Nigerian ICT hardware and services industry was estimated to worth $39.7 billion in 2014, and forecast to grow to $144 billionn by 2020.

Indeed, a document presented at the Investors’ Forum at last year’s Gulf Information Technology Exhibition (GITEX) in Dubai, UAE, made available to The Guardian disclosed that about four million mobile phones are imported into the country on a monthly basis.

According to the documents, these loopholes are avenues the Nigerian government is hoping to woo foreign investors into for the economy to move forward.

A telecoms expert and Federal Government’s consultant, Amstrong Katang, who made the presentation titled: “Investment Opportunities in the Nigerian ICT sector”, said Nigerian economy today mostly relies on ICT imports and that government was ready to change the trend.

Katang explained that the potentials in Nigeria are huge with an estimated population of 170 million. He said Nigeria today is the seventh largest country in the World; and the largest in Africa with 42 per cent of Nigeria’s population below 15 years, adding that the country’s Gross Domestic Product (GDP) has grown at close to seven per cent over the past five years.

“Also, Nigeria is Africa’s largest economy after recent re-basing exercise from $509.9 billion in 2013 from $269.5 billion. Nigeria’s consumer class is growing at approximately 23 per cent of population in 2012 while the country has had 106 active infrastructure projects valued at $ 100 billion in 2012.

“Today, abut 800, 000 PCs are shipped into the country yearly but available market is about three million, meaning there is demand gap of 2.2 million; yet, $2 billion of IT products and services are imported yearly while export is just about $5 million. Also, about four million mobile phones are shipped into the country monthly. Nigeria has a vision to be ICT hub of Africa, yet, we are having huge Internet bandwidth capacity while last-mile connectivity is non-existent”, he stressed.

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