Challenge of making the iPhone more 'affordable' in Tanzania

17Dec 2018
Mtapa Wilson
Financial Times
Challenge of making the iPhone more 'affordable' in Tanzania

In reaction to the global economy going digital, many companies are now heavily investing in digitalisation.

In this interview with Financial Times staff writer MTAPA WILSON, the chief executive officer  of iStore (Tanzania’s only Apple premium reseller), VIPUL SHAH (pictured), offers insight on progress being made by iStore in providing sustainable digital solutions and other opportunities present for the growth of the iPhone business in Tanzania. Read on…

QUESTION:  What's iPhone's estimated market share in Tanzania?

ANSWER: The iPhone sales numbers are comparable with other premium smartphones. 

This is given the nature of the Tanzanian market. The premium smartphone market is very small, probably less than five per cent of all phones.

One of the main reasons for the market being so small is that most of us have to pay in full upfront, unlike in other markets where phones can be purchased over a one or two-year period, on credit or on contract.

Q:  Since most Tanzanians prefer cheap smartphones, how can iPhone compete in this market segment?

A: I am not sure it is correct to say people prefer ‘cheap smartphones’.  I believe people choose cheaper phones because that is what they can afford.  Our challenge is to make the iPhone affordable to as many people as possible. This is why we still sell and provide full warranty on the iPhone 6.

These models run the latest Apple operating system - IOS 12 - and they are available for just 850,000/-, Value Added Tax (VAT) included.  This is comparable to many other smartphones on the market today. So customers get the benefits of iPhone and IOS at an affordable price.

It is important to note that all iPhone 6s and above run the latest IOS.  So over 90 per cent of all iPhones in use today use the latest operating system. 

This compares to about 10 per cent of all Android devices that are able to run the latest operating system.

If you run an older operating system, you may not be able to use the latest versions of Apps.  Also, if there is a security issue then you may not be able to apply the fix.

In short, if you buy an iPhone you can be assured that the software will continue to be up-to-date for at least four to five years.

Q:  Any plans to introduce cheaper iPhone models in Tanzania?

A: We already have an iPhone available at just 850,000/-.  This is one of the cheapest iPhones anywhere.

We now need to find a way where we can finance this so that customers can purchase the phone by paying in instalments, say for example 100,000/- per month.  This would make it possible for more people to own an iPhone.

Q:  Over 40 million Tanzanians out of a population of 55 million have mobile phones, and about 20 million access the internet through mobile phones. What opportunities does this present for the growth of the iPhone business in Tanzania?

A: Out of the 40 million phone users in Tanzania, fewer than one million use an iPhone.

When you look at things from this perspective, then the potential for growth is huge. But the way we do business will have to change so that we can make it affordable for people to own and use an iPhone.

This is the challenge for us. If we are able to succeed, then the outlook for business is positive.

Q:  What are some of the challenges you face?

A: I have mentioned the fact that our major challenge is there is little consumer credit and we expect people to come with the cash to buy the phones. This limits the number of customers.

The other significant challenge is refurbished phones. Some of the phone sellers import refurbished phones as they are cheaper than the new ones.

Unfortunately, customers are often unaware that they are purchasing refurbished phones, and then they are upset when the phone has a problem and there is no warranty available.

This is disappointing for customers. We understand that refurbished is one way to reduce the prices, but it is essential that customers are informed about what they are buying.

Q:  Digital economy is knowledge-intensive, focuses on service delivery and consumer satisfaction.

Currently there are a number of significant transformations happening that show Tanzania has started to embrace digitalisation. What does Tanzania need in order to build a digital economy?

A: You are absolutely right; we must always be focussed on customer satisfaction. As the competition increases, we must be looking for ways in which to woo our customers.

For Tanzanians to compete in the digital economy, we must invest in skills and knowledge. We are fortunate to have a young population born in the era of this technology.

We need to find ways to empower these young people to identify opportunities in the market and have the skills and support to exploit them.

As iStore, we invest in our team by encouraging them to continually improve their skills using Apple online training resources. In addition, we send the whole team for classroom training to continually improve our customer service skills.

We also regularly update our showroom with the latest products to allow customers to experience them.

Training and continuous innovation are areas where the private sector must work in partnership with the government and find ways to realise the opportunities that the digital economy brings.

If you look at the innovations using mobile money, you can see Tanzania is a world leader in this area. It is possible for us to succeed when we work together.

Q:  Numerous companies are now heavily investing in digitalisation because it is a new way of serving customers better as the global economy migrates into a digital economy. What role does iStore play in providing sustainable digital solutions?

A: To succeed in the digital economy, we need to work together as educators, policy-makers, and the private sector.  We are engaging with Apple to look at ways in which we can bring Apple’s ‘everyone can code’ training to more students in Tanzania.

This program teaches everyone from 8 to 80 how to code and create Apps for the App store.  We hope to have a pilot program in place in 2019.Perhaps the next ‘WhatsApp’ can be a Tanzanian developed and shared application.

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