Smartphones to rule the continent

MTN’s annual results presentation this week almost glossed over one of the most dramatic statistics in CEO Sifiso Dabengwa’s review of the results.

At the end of December, MTN had 7.3 million smartphones active on its network. Vodacom’s trading update for the last quarter of 2013 reported it had 7.2 million smartphones active.

But MTN has been selling more low-end smartphones than Vodacom. That means that its smaller margins are outweighed by Vodacom’s bigger-spending high-end users.

There were 14.5 million smartphone users at the end of last year. That’s about one smartphone for every 3.8 active accounts reported by the two networks, which between them have about 55 million connections.

Smaller networks Cell C and Telkom Mobile have about 14 million active connections between them. However, they are heavily geared towards prepaid and lower-income users, who are less likely to be able to afford smartphones yet.

Assuming they have half the big networks’ proportion of smartphone users, they would still host 1.8 million smartphones on their network.

That brings the total of smartphones active on South African networks to 16.3 million. In a population of 51.7 million, this translates to 31% penetration.

Given that the networks are adding at least a million smartphones a quarter, penetration will reach 33.3% at the end of this month. That’s one in three South Africans with a smartphone.

Although the pace of growth in smartphone sales is slowing down globally, it’s continuing relentlessly in South Africa. And where South Africa goes, the rest of Africa follows.

The growth trend and penetration levels we see in South Africa will be replicated across the continent over the next three to five years, especially as the cost of entry-level smartphones continues to plummet.

The implications are astounding. For the networks, it means increased revenue from both the purchase and use of the devices, but also greater pressure on their infrastructure.

For business, it means that customers can both communicate more directly with the busi- ness and access information about it more easily — and, of course, demand response more aggressively.

For the government, it means a new channel for automating access to official documents and services, but also greater transparency and visibility when the system goes awry.

For information-oriented sectors such as education, it becomes a channel for delivery, especially when inefficiency and maladministration compromise traditional channels.

The list is endless. A smartphone-toting population is not

The cost of data, no matter how low for the wealthy, is a major obstacle

necessarily a smarter population, but it is without doubt a population better equipped to take advantage of the riches of the information economy.

Amid the self-congratulations that these prospects afford the mobile industry, however, the downsides should not be forgotten. The cost of data, no matter how low for the wealthy, remains a major obstacle for the poor. Connectivity aside, the ability to make full use of the resources available on these devices is constrained by lack of education, literacy and something as basic as a reliable power supply.

The typical smartphone needs to be charged every day. The typical smartphone user in South Africa, more and more, will not have formal access to electricity.

Smartphones may be a great answer to many questions, but they will raise as many more.

Arthur Goldstuck is founder of World Wide Worx and editorin-chief of Gadget.co.za. Follow him on Twitter on @art2gee