Huawei Romania Smartphone Sales Up 48 Percent in First Half of 2015

Huawei Romania’s sales of smartphones increased by 48 percent year-on-year in the first half, to 130,000 units, according to a report that cited the country manager of Huawei Devices Romania, Sorina Macarescu. In spite of the increase in sales, the average selling price for handsets is declining, Huawei said. Mobile operators represent the most important sales channel for the company, Macarescu said. Huawei’s smartphone models are offered by all Romanian mobile operators—Orange Romania, Vodafone Romania, Telekom Romania Mobile Communications and RCS & RDS’ Digi Mobil. The success of Huawei indicates a salient fact about today’s global smartphone market—that as technologies develop, budget-priced devices are closing the gap with high-priced premium devices like the iPhone and Samsung Galaxy in terms of features and reliability. Huawei has been particularly aggressive in expanding beyond China and other Asian markets into the rest of the world. In Romania, a less-affluent European market, Huawei’s smartphones have clearly taken on a dominant role. The lesson for mobile operators, in Romania as elsewhere, is that they can expect to rely less and less on smartphone sales as a revenue driver in the future. In this particular market, for example, prices are falling even as sales are rising. However, while low-priced devices will drive less revenue in terms of sales, they will drive revenue in the long term by virtue of their ability to increase demand for data among a widening user base.

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Samsung Argentina Launches Online Store on Instagram

Samsung Argentina launched a new site that enables users to see and buy Samsung’s smartphones via Instagram. Recent studies indicate that the photo-sharing app is the fastest-growing property on the internet, with approximately 90 million people using it at least once a month.

By advertising and selling Samsung devices over Instagram, Samsung is attempting to leverage the power of interactive pictorial and video advertising on social media to increase its mobile device market share and further reduce its dependence on mobile operators to sell their devices. Reports from 2014 indicate that Argentina’s smartphone penetration is relatively high for the region—12 million to 14 million mobile phones sold annually in the local market—although sales continue to be held back by the high cost of devices. Samsung is trying to simplify the device-purchasing process and to eliminate the additional charges and/or lengthy contracts that might be added by mobile operators.

In Asia, South America, and many other parts of the world, users buy their preferred mobile phone first and then go to a retail outlet to buy a SIM card for voice and data services. Many Argentinians own multiple SIM cards, some having a phone  for each mobile operator to take advantage of special offers. Using multiple sales strategies leveraging social media, mobile operator promotions, and direct sales, Samsung is trying to use any avenue available to reach consumers with its mobile devices. We would expect to see an expansion of this strategy beyond Argentina on the part of Samsung as well as other device manufacturers. In the future, mobile operators will likely have to rely less on device sales and more on value-added services for revenues.

“More and more operators are offering a wide variety of plans that do not include mobile devices. While mobile operators continue to be major distributors of devices, they are trying to differentiate the sale of their mobile services from the sale of handsets. It seems that this approach meets customers’ expectations for flexibility. Subscribers can select a specific mobile service or a plan, buy a SIM card and use it on the handset they already own. Device purchase is not necessary as long as the handset is compatible with the SIM. Tri SIM cards, offered by a large number of operators including Telekom Romania, solve the issue of SIM incompatibility. As mobile operators concentrate on selling services, device manufacturers are exploring other distribution channels to sell their products, such as Samsung’s use of social media (Instagram) as a third-party venue to distribute its mobile handsets.”

Edyta Krzton, Senior

Analyst at Tarifica

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx