[business daily] Cell phone makers are scrambling for deals to supply data-enabled handsets as telecommunication firms intensify their presence in the mobile data market.
The race to get a share of the Kenyan data market is expected to get stiffer as operators Telkom Kenya's Orange and Zain Kenya upgrade to faster 3G mobile Internet technology by the end of the year with Safaricom planning to upgrade its current 3G network to 4G in the next two months.
The scramble has seen mobile phone manufacturers who can offer higher discounts on easy-to-use data-enabled phones clinch lucrative supply deals with government agencies, companies and non-governmental organisations on behalf of the telephony companies.
Despite the drop in margins per handset and increased spend on brand marketing, revenues are set to grow as companies buy in bulk the cheaper handsets and those that consumers can easily use.
Cell phone makers say they intend to leverage on the high volumes firms are buying to cushion their bottom lines.
The biggest winners in the supply tender race are the leading handsets makers, Nokia, Samsung, LG, Motorola and Sony Ericsson.
They are targeting companies and government agencies who buy the handsets in bulk as they benefit from heavy discounts and also enjoy the bundling of the handsets with data from any of the operators.
Recently during the referendum, Nokia clinched a competitive deal to supply Interim Independent Electoral Commission (IIEC) with 20,000 handsets that were used by the agents to relay the results from the grassroots.
Ms Dorothy Ooko, the communication manager for Nokia in East and Southern Africa, says entering into a deal with telecommunication operators to supply their clients or market with data-enabled handsets phones is becoming more competitive than before.
"The IIEC deal was the most recent competitive offer in the market and what the clients were looking for is affordable and also easy to use data-enabled handsets," said Ms Ooko. "With the government embracing things like e-health the competition is going to get stiffer as they will require handsets to register things like births."
Increased use of social networking sites has also fuelled take-up of data-enabled handsets.
Improved telecommunication infrastructure in Kenya with the connection of three undersea cables, TEAMs, Seacom and Eassy alongside a number of terrestrial fibre optics by both the government and the private sector has also led to increased use of mobile phones to access faster internet despite one's location.
Internet usage has grown according to the industry regulator, Communication Commission of Kenya (CCK).
CCK says the increase in the number of internet subscribers has been accelerated by the provision of data services through GPRS/Edge and 3G networks of mobile operators.
"Mobile service contributed 99 per cent of the total Internet subscriptions during the period under review," says a CCK report.
CCK attributes the increase in the number of Internet users to innovative offerings such as connectivity to social networking sites through the mobile phones, a service that has gained popularity among young people in the country.
The deal between the telecommunication companies and the handsets vendors come in a number of ways, a telecommunication operator can be approached by a firm to offer it data services through a range of mobile handsets which will force it to look for the best option available in the market as in the case of the IIEC or they can enter into agreement where the handset vendor supplies the operator with locked handsets, which means the buyer cannot use any SIM card from other operators on the handset.
Mr Antony Hutia, sales and marketing manager Mobile division, says the company is currently in a deal with Safaricom, but still negotiating with Zain Kenya to supply it with low-end data enabled handsets.
"The competition is stiffer and the strategy we are using currently is to offer a phone with as many features as possible at low retail prices," said Mr Hutia.
"The operators are not going to take just any other phone, which dictates that before we approach them we must do serious marketing on the particular handsets and our brand such that the consumers will have some information about it."
Mobicom, Telkom's Kenya largest dealer on the other hand has entered into a deal with Nokia, Motorola and Samsung where it is offering free data-enabled handsets for anyone buying its airtime worth Sh1,000.
Safaricom chief commercial officer Peter Arina said the quest for increased data penetration and usage in Kenya has always been constrained by lack of data-enabled devices.
Race to Supply Internet Mobile Phones Intensifies
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