Lenovo Group Ltd. (992) will introduce its first smartphones in Africa, with a release planned for Nigeria before the end of the year, as the Chinese company looks for markets where it can sell directly to customers.
The world’s second-biggest maker of personal computers picked Nigeria because, unlike in South Africa, it doesn’t have to work with local telecommunications companies in order to sell its handsets, according to Graham Braum, general manager of Africa. South Africa is the continent’s biggest economy while Nigeria is the second largest.
“Nigeria is coming toward the end of the year and then we will investigate the rest of Africa,” Braum said in an interview at the company’s offices in Johannesburg. “We’re trying to sell off the shelf. We’ve picked the open market.”
Lenovo is developing mobile devices such as smartphones and tablets as it seeks to lure customers from Apple Inc. (AAPL:US) and Samsung Electronics Co. (005930) and weather a global slump in demand for PCs. The Beijing-based company was alone among the world’s four biggest PC makers to report shipments growth in the three months through December, as those of Hewlett-Packard Co. (HPQ:US), Dell Inc. (DELL:US) and Acer Computer International Ltd. fell, according to research by Gartner Inc.
Nigeria, Africa’s most populous nation with more than 160 million people, had about 113 million wireless subscribers at the end of 2012, according to data compiled by Bloomberg. The number of smartphone users is expected to grow to more than 35 million by the end of 2017 from 5.6 million at end of last year, according to research by Informa Telecoms & Media.
“The growth is fuelled by the declining prices of smartphones, the expansion of data networks as well as competitive data pricing,” Thecla Mbongue, an Informa Telecoms & Media analyst, said in an e-mail.
Nigeria’s telecommunications companies, led by the local unit of Johannesburg-based MTN Group Ltd. (MTN), wield less power than carriers in other African markets, making it easier and quicker for Lenovo to release its products, Braum said.
“If you look at South Africa, 99 percent of the business is done through the telcos and that’s a lot of work to do to launch in a telco-based economy,” he said. “Lead time is up to nine months to do all the planning, certification and you cannot align with one network.”
Lenovo may sell its smartphones across as many as six price bands in Nigeria and some could retail at about $500, Oliver Ebel, vice president and general manager of Lenovo Middle East and Africa, said in the same interview.
Ebel declined to specify which models will be sold in Nigeria, saying the phones will probably have large screen sizes and a long battery life, possibly with the capability to charge from other phones via a USB connection.
After Nigeria, Lenovo will target Egypt as part of its African expansion, Ebel said. “It’s a huge population as well with huge smartphone growth and it’s an open market,” he said. Egypt has a population of about 84 million.
Lenovo shares rose 0.2 percent to HK$6.85 at the close of trading in Hong Kong. The stock has slipped 2.4 percent this year, valuing the Beijing-based company at HK$71.5 billion ($9.2 billion).
Microsoft Corp., trying to find growth markets for its mobile products, is also planning to expand its smartphone sales in Nigeria, according to Gustavo Fuchs, who runs its Windows Phone business in Africa and Middle East. The country’s smartphone penetration has doubled every year and now stands at 10 percent, he said in an interview last week.
Africa’s handset ownership will grow to 85 percent of the population in 2015 from about 73 percent last year, reaching 900 million users, A.T. Kearney estimates. Sales growth in developed markets in Europe, North America and Asia has slowed as penetration surpassed 100 percent.
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