My father bought my very first mobile phone in early 2004; a Nokia 1100 that only saved up to 50 contacts and was mostly used to play Snake. In the years that followed, I ‘graduated’ to a Vodafone-branded Sagem MY V-55 that could send pictures and music via Infrared, a Sagem my401X with Bluetooth support but only 3 megabytes of storage, Nokia 5330 XpressMusic then 5530 XpressMusic, and many others I don’t even remember -- all before my first Blackberry.


Sagem MY V-55
I suspect this upgrade path feels familiar, if dramatic, to those of you who lived in an African country between 2001 and 2009; one European brand to the next, mostly Nokia, with each phone being more capable than the last. And as you climbed the ladder, the phones had better apps and more diverse use cases (for example, I read all the Harry Potter books as .jar files on my first XpressMusic), until now. This is why the above charts matter.

For years, the growth story for technology startups in Africa has been the ‘unstoppable’ rise in ‘smartphone penetration’. Of course, in reality, things are...not so simple. Since 2015, smartphones started losing market share to feature phones as a percentage of all phones sold on the continent.

This is likely for three reasons: 1) many African currencies have lost value against the US dollar, in turn, making [imported] smartphones too expensive for customers, 2) we have run out of ‘middle class’ to sell these expensive smartphones to, and 3) some countries with large populations, like Ethiopia and DR Congo are seeing their mobile phone markets expand, as many users are only just getting their first phones. Feature phone sales are growing stronger by the year, growing from 55.4% of mobile phone sales in 2016 to 61% in 2017.

Most of this momentum is driven by Transsion Holdings, owner of the Tecno, iTel, and Infinix brands. In July 2006, the company was founded by George Zhu Zhaojiang as ‘Tecno Telecom Limited’ to serve South-East Asia, but about two years later, it pulled out of all its markets and shifted focus entirely to Africa. The logic was simple: Transsion had no chance in China, but Africa also had 1.2bn people and much lower penetration (sub-30% vs. 60%). It was wide open.

The company optimized its production process to serve low-income consumers in Africa, e.g. a strong focus on lower prices for higher specs, dual-SIM support because consumers wanted to avoid high tariffs incurred by calling across operators (i.e. MTN calling Airtel), bigger batteries and low powered chipsets to account for poor electricity infrastructure, local language support, and even this weirdness:

“For African consumers, a main medium of entertainment is photos – they love to take selfies and share them with friends. The traditional camera was not optimised for the African consumer because often, for those with darker skin, the photos don’t come out well especially in low light. We did research using over 10,000 photos of African consumers to create a special algorithm to optimise the camera to attract 30% more light on the darker face. We call this ‘Africa Focus’. It’s been heavily popular. It improved our cameras and won the hearts of Africans who like to take selfies.
The result? Transsion has grown its sales from 310,000 to more than 100 million units per annum. Transsion’s brands have filled the void left by Nokia, and the upgrade ladder for the average African consumer today looks more like iTel -> Infinix -> Huawei/Tecno -> Xiaomi, and so on. In the early days, Tecno phones were perceived as cheap, low-quality knock-offs of actual phones, but much like its customers, Transsion has laddered up:

TRANSSION’S TROJAN HORSES

One thing, though: the hardware ecosystems in Shenzhen and Huizhou, as well as the modularization of the phone supply chain that allows Transsion price their devices so low are not unique to them. The mobile phone manufacturing business is famous for its low margins, especially as most brands, undifferentiated, compete on the vector of price, driving margins even lower.

Tecno, iTel, and Infinix have all built significant brand equity across the continent, but the same factors that drove Transsion’s growth -- consumers who count every penny -- mean that it must find other ways to gain value from them. (The assumption being that upgrade cycles are slower than in developed markets, where Apple sells new iPhones to old consumers every year.)

To that end, here’s Techweez:

We have evidence in our possession that Transsion, through a joint venture with NetEase – a Chinese Internet technology company is prepping to launch a service by the name PalmPay, under a newly registered company, Transsnet Payment Limited. According to Transsnet’s documentation, they describe themselves as a company that develops financial services for the mobile generation in Africa and aim to reach 100 million users within the next 3 years.

What we know so far is that PalmPay will offer mobile loans as well as a payments platform that will allow users to send money to each other, pay for bills and buy airtime. Additionally, there’s a mention of PalmPoints, which is some form of loyalty program to keep the customers engaged with the product.
Of course, Transsion is building a mobile payments service. There are many similarities between their approach and Xiaomi’s in other markets; now that they are getting phones into the hands of every African for cheap, they will try to make more money from them via online services. Sell cheap phones at cost or lower, and try to make the money back via online services. Rinse and repeat. This is not Transsion’s first rodeo: their phones already come bundled with PalmPlay (an alternative app store) and PalmChat (a messaging service they claim has 170 million subscribers, though I find that hard to believe), and the mechanism for getting these services in the hands of customers already exists: phone sales driven by brand loyalty.

But zooming out, we are witness to and participants in a global race to own the African consumer. Today, most of their economic activity is centered around the bottom of Maslow’s hierarchy of needs, but the expectation is that they will move up to higher value activity, and the companies that own them then will be that much better off for it.

So, we have products like Branch, Paylater, Piggybank, building at the application layer; M-Pesa and Airtel Money using the SIM Card as their chokepoint; Opera trying to become ‘the internet’ to funnel transactions through O-Pay (we will talk more about this next week, but this thread by Michael Kimani is a good place to start), and Transsion Holdings, producers of the phones they all get distributed on, venturing into financial services. O, boy.

Source:. https://www.thesubtext.io/transsions-trojan-horses

More Stats

Interesting statistics.

Too long with big grammar, I give up mehn.

Fascinating... Who would have believed that the Transsion brand would some day dominate African's mobile phone market

Darkseid:
Too long with big grammar, I give up mehn.

Lol...the article just reinstated Tecno’s dominance in Africa and their new plans to rollout a PalmPay. a payment system.

Goldyyy:
Fascinating... Who would have believed that the Transsion brand would some day dominate African's mobile phone market

When you do you’re market research and make products tailored for a certain demographic you’ll surely dominate. Africa is poor, make smartphones affordable and you’ll dominate!

So, does it mean the palmpay will be coming as an app on android phones?

Lol, I love the name tag 'transsion Trojan horse '. No doubt this company has a strong penetration force and fully penetrated the African market.

What's this idea of palm pay, is it like a mobile bank or what?

tafat:
Lol, I love the name tag 'transsion Trojan horse '. No doubt this company has a strong penetration force and fully penetrated the African market.

no be lie, the company could be used as a specimen for entrepreneurs, their penetration force is that good.

Transsion has worked so had to become what it is today. Good one for them.
Cc lalasticlala honsule

The result of hard is success... Transsion has achieved a great feat.

This article is interesting...Thanks for sharing

Right now I can say in every 10 phone owners about 8 are TECNO users... They've really dominated African's mobile phone market...

They ain't here for joke... It's apparent

Abdstrakt:

When you do you’re market research and make products tailored for a certain demographic you’ll surely dominate. Africa is poor, make smartphones affordable and you’ll dominate!

Transsion has worked really hard to get to where they are now

They truly have

bravesoul247:
The result of hard is success... Transsion has achieved a great feat.

Hmm

nnaomaog:
So, does it mean the palmpay will be coming as an app on android phones?

This shows that hardwork and consistency will get you anywhere

Goldyyy:
Fascinating... Who would have believed that the Transsion brand would some day dominate African's mobile phone market

Yes they have in Nigeria

Pekuliar:
Right now I can say in every 10 phone owners about 8 are TECNO users... They've really dominated African's mobile phone market...

Omo they try sha
They worked really hard

Goldyyy:
Fascinating... Who would have believed that the Transsion brand would some day dominate African's mobile phone market

Na true you talk

chicwoman:
This shows that hardwork and consistency will get you anywhere

They have
Its shows that slowly and sure, you will get to where you aim

chicwoman:
Transsion has worked really hard to get to where they are now

This article's Head On, transsion has really dominated the african market.

I just hope the Nigerians working there don't mess this up with their tribalism brouhaha and funny habit of placing a manipulative dull cunt in IT dept while the gurus remain below the food chain.

For those who don't like reading, this article is explaining how Tecno has dominated African markets and the idea of a new payment platform. Good stuff.

Is this the same as palm credit?

Tamaramientei:
Omo they try sha They worked really hard

true.. they really know what they're doing

chicwoman:
This shows that hardwork and consistency will get you anywhere

yeah.. they were really consistent I must say

Trying to understand what consumers want and tapping into the buying power of the average African.

Sincerly speaking, these guys have done a great job. They made the poor/average their main focus, truth be told alot of people got familiar with affordable smartphones when transsion made its first smartphone (tecno n3 ?)
And over the years, they have improved more unlike what they were before, i was a heavy critic. But i have to stil give them credit (truth is the two phones am currently using are transsion phones) my itel 5630 just kept doing what my nokia 2700 classic was doing(2011), and a little of what my sony ericsson k750i did back then. Recently bought the 2 tecno pop1 for myself, and 4 someone, and so far its doing what her blackberry classic would do.
lets see how palmpay plays.