What Is the Future of the Smartphone Market in Kazakhstan?

Global smartphone shipments in the first quarter of 2020 shrank by 11.7% compared to the same period last year, according to the data provided by IDC (a global market research company which specializes in information and communication technology).

In total, in the first quarter of 2020, vendors shipped 275.8 million smartphones. A decline in shipments at the start of the year is a regular occurrence thanks to slowing sales after the active Christmas and New Year season. But, as IDC notes, such a big decrease compared to the same period last year is the largest in history.

However, Kazakhstan bucks the trend. Import data from the State Revenue Committee shows that in the first three months of 2020, the country imported 988,798 telephones for cellular networks or other wireless communication networks. This is 24.5% higher than the import of the same goods in January through March last year.

According to the analysis of retail turnover from the GfK company, the telecommunications segment of the home appliances and electronics market in the first quarter of 2020 grew by 23.5% compared to the first quarter of the previous year. Sales in this segment amounted to 114.4 billion tenge (about $273 million). GfK analytics attributed this result to «the positive impact of negative factors on the market size.» In their opinion, buyer activity was encouraged by the fact that with tenge decreasing in value, stores did not change prices for imported gadgets. In general, the Kazakhstani market of home appliances and electronics grew by 27% in national currency in the first quarter of 2020, compared to the same period in 2019.

At the end of 2020, IDC is expecting global smartphone sales to fall by 11.9%. Kazakhstani market participants consider this projection realistic, despite the positive start of the year on a local scale. Sales figures in the second quarter no longer give reason for optimism. According to Rauan Kabdrakhimov, commercial director for sales and customer service at Beeline Kazakhstan, smartphone sales might fall by 10% this year, especially if the tenge exchange rate continues to weaken.

Who’s on top and who’s behind

Beeline Kazakhstan made a ranking of smartphone sales by brand, based on its own sales in 2019. According to the company, the top 4 looks like this: the first place goes to Samsung – in monetary terms it has a market share of 48%. The best-selling models are Galaxy A10, Galaxy A50 and Galaxy A20. The second place goes to Apple with a 21% share of the market. Its most popular models in Kazakhstan are iPhone 11, iPhone XR and iPhone 7. Huawei takes the third place with a 14.4% market share. Its top selling models are Huawei Y6, Huawei Y7 and Huawei P30 Lite. The fourth place belongs to Oppo with a 7.3% market share. Buyers prefer the Oppo A5s, Oppo A1k and Oppo A5 models.

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Beeline Kazakhstan believes that in 2020, Samsung and Apple will retain their positions on the market, while Huawei might lose the third place in the ranking to Oppo.

The third place in the smartphone popularity ranking is also contested by Xiaomi (it doesn’t feature in Beeline Kazakhstan’s list since the company doesn’t work with Xiaomi). Xiaomi has its own marketing strategy: the company does not promote its products through a single official representative, instead opting for direct connections with a large number of distributor stores.

Online store mi.com.kz, the official distributor of Xiaomi in Kazakhstan, informed Kursiv.kz that smartphone sales are currently higher than last year and the brand is seriously contesting Huawei on the market, but no specific figures were provided. The most popular Xiaomi models in Kazakhstan, according to mi.com.kz, are Redmi Note 8, Redmi Note 9 and Xiaomi Poco F2.

The right to the top three

If we focus on the data from Statcounter.com, which tracks the use of smartphone to access the Internet, then indeed it turns out that Xiaomi is directly competing with Huawei in the smartphone market of Kazakhstan. Statcounter.com indicates that in 2019, the ranking looked like this: in the first place, Samsung with 41.85%, in second, Apple with 20.7%. Xiaomi and Huawei were competing for the third place all year. Xiaomi began the year with a 10.27% market share and ended it at 12.43%. As for Huawei, it began 2019 with a 9.3% share and ended at 11.92%. The fifth place went to Oppo with 4.39%.

The outcome of this competition between Huawei and its opposing brands in the Kazakhstani market will depend on this year’s sales figures. Will Huawei be able to overcome the black streak caused by the US sanctions? This is the biggest question of the smartphone market.

Mukhtarali Ibrayev, PR manager of Huawei Device in Kazakhstan and Central Asia, told Kursiv.kz that the company has created a new ecosystem, Huawei Mobile Services (HMS), which is to compete with the Google ecosystem. The Huawei system includes all the necessary services for a comfortable transition to HMS-based smartphones. Millions of app developers around the world are already collaborating with the Huawei AppGallery app store. Huawei AppGallery will include the most popular apps among Kazakhstani users: Air Astana, Kolesa.kz, 2gis, Altel and Tele2 Kazakhstan.

On a global scale, based on results of the first quarter, Huawei ranks second in shipments (49 million smartphones, or 17.8% of the world market). Samsung is in first with 58.3 million devices (21.1%), and Apple is in third with 36.7 million (13.3%).

Xiaomi is only in fourth globally with 29.5 million smartphones, or 10.7% of world shipments.