Samsung's plan for African dominance

From green technology to local relevance and investment, Samsung wants to own Africa. We take a closer look at what it plans for the next five years.

Even though the telecoms sector is one of the most significant transforming forces for good in the world, it’s also one of the leading sources of carbon emissions. Do the maths … Outside of the power requirements of base stations, there’s the combined demand for power created by the need to keep cellphone batteries charged, even in the lowest income brackets. Add to this the negative impact of the endless manufacture of new devices and the severe shortage of recycling facilities capable of responsibility and you begin getting a picture of just how significant a contributor the telecoms sector is. And because of our ‘addiction’ to telecoms products and services, usage is unlikely to decrease anytime soon. The only solution is for the vendors, service providers and other related parties to begin thinking and behaving more responsibly at an international scale. Samsung Africa’s COO, George Ferreira, says he’s proud of the fact that his organization considers itself somewhat of a pioneer in this regard.

Green Crusader

“As an international organisation, we’ve made great strides in continuing to meet our customers’ demands for new and exciting products, while at the same time looking after environment and planet,” he says. “Our engineers are dedicated to the task of maximizing outputs and delivering a superior user experience while minimising environmental impact.” Primarily, what Ferreira says speaks to Samsung’s practice of using more efficient gases inside its fridges and air conditioners, improving the battery technology used in its digital devices, and manufacturing products with more environmentally friendly materials. “This even speaks to the implementation of newer technologies, such as LTE, which gives users and the networks they utiltise better capacity with lower power requirements, he says. “It’s also massively important that these devices are recycled properly and responsibly,” he adds, “and in this regard we’ve put a great deal of effort into finding recycling partners in South Africa and other parts of the continent, capable of disposing of and recycling products that have passed their useful life. “The partners chosen,” Ferreira says, “are put through a rigorous interviewing process and need to produce credentials on their compliance with local laws, before they are engaged.” Ferreira says that Samsung even offers promotional periods where – in concert with retailers – it arranges for the return and disposal/recycling of other vendors’ products, providing a replacement from the Samsung stable is purchased. “We also take pride in the fact that we are heavily involved in the process of ensuring products stemming from our existence in the industry don’t negatively impact the planet,” he says. Ferreira says that Samsung is so passionate about this that it regularly sends the very engineers responsible for designing its products to countries within Africa, so products can be designed for greater appropriateness and durability.

Bult to Last

To this end, Samsung has brought products to the African market such as televisions with built-in surge protectors, air conditioners designed to withstand fluctuating power supplies, and fridges that are more heavily insulated and can therefore withstand an intermittent electricity source. From a telecoms perspective, there are dual-SIM, ruggedized and extremely affordable handsets on offer. By offering products that are better suited to customers’ needs in Africa, we dramatically increase the usable life of those products and make a substantial dent in the amount of electronic waste we as an industry create,” Ferreira says. He adds that his company is also a massive fan of the moves being made by the ITU to standardize on a single charger interface and technology for mobile phones. So far, it’s looking strongly as if that interface will be Micro USB – bringing a combination of convenience and greener behaviour to the mix. “When users are no longer dependent on a single type of charger from a single vendor, there will be less call for hundreds of different chargers and cables, easing the load on the world from a manufacturing perspective,” Ferreira says. “In fact, in time,” he continues, “it might well be possible for users to decide whether or not they’d like to forego their new cellphone coming with a charger – either saving a couple of bucks or realizing the favour they’re doing for the environment.”

Doing more with Less

“Ultimately, however, we can make the most substantial impact by doing more with less,” Ferreira says. Again, the conversation drifts back to LTE and he says that the most exciting part of the LTE value proposition is the ability to render a higher class of service with less onerous power requirements. “For me it’s about the ability to handle more traffic without the need for numerous complex, intricate and power hungry management systems. “Less physical infrastructure – but infrastructure that’s capable of more – will mean towers that require less cooling. And this is something that greatly contributes to more power efficiency in the industry,” he says. It’s a little known fact that Samsung is heavily involved in the infrastructure side of the telecoms industry. But, Ferreira says it is already engaged in LTE projects for the Malawian, Ghanaian and Angolan markets, and is engaged in talks with South African telcos. “We should also not forget that we’re developing a range of devices capable of using LTE technology,” he says. “I honestly believe that, should we continue innovating at the pace we are – and drive LTE into the market swiftly – we’ll be looking at a more power conscious industry in no time,” he adds.

Embracing Solar

Increased product durability and appropriateness, coupled with technology that makes more efficient use of available power resources, can only take you so far, however. Ferreira says that there is quite simply no choice for today’s technology vendors but to look at alternative ways of powering electronic products. To this end, he says, Samsung already has a solar powered netbook and is making great strides in its labs when it comes to green power. “The solar powered netbook is something that’s doing extremely well in the African market. The challenge is, however, all about making a one to two hour solar charge sufficient to power such a machine for the entire day and cramming higher end components into that power envelope. “It’s a start, however, and I think it’s plausible that – in a couple of years’ time – we will be using more performance centric devices that can go for an entire day on a couple of hours’ exposure to sunlight.

Affordable Smartphones

Ferreira says that the industry faces substantial challenges when it comes to doing more with less – and at the core of these challenges is the war being fought between the various smartphone operating systems. “When we look at the African market, we must consider that more than 50% of the devices sold across the continent cost less than $30,” Ferreira says. “And if we up the price bracket to ‘less than $50’, we’re able to account for up to 70% of the African market,” he adds. “We can deduce that, in order for smartphones to bring the Internet to the masses, they cannot cost more $50 all in. “And quite frankly, as good as Android is, it’s not yet possible for an Android device to be sold at this price point,” he says. It’s for this reason that Ferreira predicts that over the coming 12 to 18 months, the market might well have access to a lighter version of Android – similar conceptually to the lighter operating systems used on netbooks targeted at entry-level users and students. The reasoning makes sense. With a less onerous set of feature requirements, this lighter version of Android will have lower hardware requirements and allow for much more cost effective smartphones to find their way into the market. Despite Samsung having plays in the Java, Windows Phone 7 and its own Bada (ie, its own smartphone operating system) space, Ferreira says that Android is the operating system that’s of most interest to Samsung. “That’s because Android has arrived in Africa and every quarter when we receive the GFK reports it continues creeping up on all other players. The market is voting with its wallet and we’re simply adapting our strategy,” he says. However, Ferreira believes that by far the two most interesting trends are the uptake of dual-SIM handsets and tablet form factor devices. While the dual-SIM devices hold clear benefits for African users, the popularity of tablets must somehow stem from their ability to deliver the kind of functionality African users need PCs and notebooks for – but in a more attractive package. “We’re well ahead of our projections for tablets and I believe this will continue well into the future,” he adds.

Tablets - Here we Grow

Ferreira says that research from IDC echoes this sentiment, predicting between 300% and 400% year on year growth for tablets over the next couple of years. “We’re personally tripling and quadrupling our tablet business in Africa, and currently own more than 60% of the market share,” he says. And this is despite Africa being one of the most expensive countries for cellular data. Interestingly enough, Ferreira believes the growth we as a continent are experiencing is carrying on, unhindered by these high usage costs. “People are hungry for information and Android devices – regardless of whether they are in the form of a smartphone or a tablet – facilitate that need,” Ferreira says. “When costs do come down, however – with savings from undersea cable providers beginning to make an impact – we’ll see an even stronger move from feature phones to smartphones, and operators supporting these moves with aggressive pricing,” he says. In fact, Ferreira reveals that Samsung is already in final discussions with South African operators and in early discussions with some African operators about the delivery of affordable ‘uncapped’ or ‘all-you-can eat’ data packages that will allow heavy smartphone and tablet users to enjoy their devices and the Internet without worrying about the end of month bill. “I predict these will be in place before the end of the year in South Africa and during the course of 2012 in the rest of Africa,” he says.

AFRICA – Key to the Strategy

“Earlier this year, we committed to pushing US$140 million of investment into the African market over the next five years,” Ferreira says. “This investment will be evenly distributed across all aspects of our African operations, but most notably towards the creation of more logistics hubs, better incountry representation, and improving and uplifting our on-the-ground workforce. “We will be marketing, improving our partner ecosystem and increasing Samsung’s consumer-focused brand penetration with more branded shops, mobile plazas and preferred plazas,” he explains. While Samsung is playing its cards close to its chest when it comes to its strategy for logistics, staffing, marketing and better in-country representation (there’s after all some competitive advantage in this), Ferreira says he can talk about the strategy for increasing brand penetration and building new partnerships. “From a consumer engagement perspective, the plan is for Samsung to open an additional 100 of its brand shops across the continent each year for the next four years – essentially taking our presence from 100 stores to 500 stores,” he says. “We also want to open an additional 150 to 200 Samsung mobile plazas each year for the next five years, across all regions,” he adds. “This will bring a combination of mobile devices and cameras and digital devices to markets that previously never had access,” he says. At least US$20 million of the US$28 million committed each year (US$140 million over five years), will go directly to these efforts, with the balance to efforts Ferreira says Samsung needs to keep quiet about. He says he really cannot overstate the excitement and interest Samsung has for the African market at present. And the evidence of this will show through its strong investments over the next while. “We’re not just bringing products to Africa that have been successful in other regions,” he continues. “We want to develop products that deliver local relevance in every country we operate and grow Samsung’s presence in every country through adding human resources,” he says. “As our business grows, expect us to increase the level of manufacturing we do across Africa,” he adds. “We’re serious about this continent,” he concludes.