Transsion: Chinese Tech Giant, The Apple of Africa?
Abduljabbar takes a deep dive into how Transsion Holdings, a mobile phone manufacturer based in Shenzhen, China became one of the largest brands in Africa.
In 15 years, Transsion, the Chinese mobile phone maker, has built an ecosystem of digital products for the devices it has sold so far in Africa, a network that gives it an Apple-like presence in one of the world’s fastest-growing markets. Right from the start, Transsion prioritised market penetration over flair to beat out more established tech manufacturers, by producing budget-friendly devices. Locating its factories across the continent contributed to reducing the overhead cost of production.
The ecosystem it has built can be likened to the approach Apple took over 30 years ago to dominate tech, starting with personal computing before expanding into different digital devices and software products such as apps.
Apple’s approach to music streaming took the global music industry to new levels from just as innovative iTunes. Their mobile devices popularised their proprietary OS and they developed payment services using their hardware and software i.e. Apple Pay. Today, they are a trillion-dollar company. Transsion's approach mimics the Apple playbook by prioritising a hardware-software relationship but localises it for each market they have permeated. Their mobile division caters to customers in limited spending brackets ($50-$200) leading the company to spread its offerings across feature limited devices and smartphones.
Tecno, now their flagship brand, came from humble beginnings. Sales of Tecno branded devices began in 2008 following the company's strategic shift toward focusing on African markets with their first major success arriving courtesy of the Tecno 4 Runner, a quad-SIM mobile phone. Driven by technological advancements and a gaping digital literacy divide, Transsion leveraged an improved brand identity to enter the smartphone race for Africa while creating an entirely new brand to cater to their earliest audiences i.e. itel. Zeroing in on the entry-level feature phone market, the separation allowed Tecno to grow beyond one mobile phone class.
Tecno's first foray into smartphone territory came in 2012 with the development of the T1. Tecno’s annual sales volume reached approximately 20 million in 2012 according to their sales figures and by 2014, the brand's breakthrough in the smartphone market was signalled by the completion of 860 stores across Sub-Saharan Africa.
Armed with a reputation for building budget-friendly flagship killers, Transsion's next focus was the development of an exclusively smartphone focused brand and the result was Infinix. Founded in 2013, Infinix's goal was to maintain Tecno's focus while appealing to a younger demographic looking to break into smartphone territory without breaking the bank.
They managed this by developing three separate brands to cater to different demographics based on needs and spending power namely Tecno and Infinix for the smartphone and itel for the feature phone markets respectively. Over time, however, all three brands have come within contact of both phone classes and as spending powers increase, Africa looks set to crossover from a primarily feature phone market to a smartphone one.
Today, all three brands make smartphones in similar price brackets with Tecno and Infinix attending to the top of the pyramid while itel concentrates on the middle where the digital demographic divide fuelled by issues such as cost, a lack of literacy and a steep learning curve hinder users from upgrading to a smartphone. For many in Africa, voice calls and texts remain king.
More often than not, proprietary applications by original equipment manufacturers are deleted to make room for third-party apps, owing to either a lack of functionality or a need to connect with a bigger community. Transsion’s approach has been wildly successful in this regard.
The preinstallation of proprietary Transsion software on their iteration of the Android OS has proved popular amongst the customer base as it limits the need to obtain such applications from the Play Store. While this might not seem like much to customers and enthusiasts in developed nations, spending money on mobile data to acquire necessary apps is unpopular in developing ones. If you bought a Tecno or Infinix today, one would possess instant access to Boomplay. Such innovation has placed them firmly in the lead to convert the uninitiated amongst Africa's 1.2 billion population.
With VSkit (their short video app and answer to TikTok), Phoenix Browser and news aggregator, Scooper, Transsion's intentions are one step beyond deliberate. Offering attractive stock app options that are well-rounded alternatives to other third-party leading applications has been a derided move by most mobile manufacturers historically, yet the benefits of such pre-installations in a market such as this seems to have convinced more customers than ever.
Boomplay, its music streaming app, has become the biggest digital service provider/streaming platform on the continent and is further proof of their purposeful direction.
Streaming services in Africa are not nascent, the earliest services like Deezer and Spinlet offered streaming opportunities to creators and consumers since 2013 and 2012 respectively. Pioneering two of the models common with streaming platforms (paid only services and freemium), Deezer and Spinlet looked to be the first to battle for Africa’s streaming rights, a fight they promptly lost to global giant Spotify. While both the aforementioned sites possessed a great deal of the music available on Spotify and Apple Music, there were a variety of problems. Deezer’s earliest pricing was too expensive and Spinlet (albeit being appointed by the International Federation of the Phonographic Industry to manage ISRCs, a fundamental tool for tracking music revenue) failed to convert users from the ad version of the service into paying customers.
Earlier this year, Spotify finally broke ground in Nigeria alongside 79 other countries across Africa. Attempting to compete with their biggest rivals i.e. Apple Music, Spotify matched the price outlay for all their plans coming in at ₦900 ($2.19) for its Premium monthly subscription, ₦1400 ($3.40) for the Family plan and ₦450 ($1.09) for the Student plan. In order to compete with both brands that own significantly more market share and brand equity, smaller DSPs have begun to undercut prices to reflect better value for money. Following the lead, Deezer has also cut its subscription rates in Nigeria. The new charges are ₦900 for Deezer Premium, ₦1400 for Deezer HiFi, and ₦1400 for Deezer Family. TIDAL emerged as a potential unicorn. It’s appearance in Nigeria came as a surprise to many and the subscription bundling deal with MTN surprised many more. Unfortunately, the sound strategy has not reflected in significant user base growth even though they come the closest to undercutting both Apple and Spotify at ₦800 monthly and a three-day plan that costs ₦120.
Audiomack and Boomplay could perhaps be said to pose the biggest threat to each other, they both offer ad-supported listening features for non-premium subscribers and share similar prices.
American streaming service Audiomack offers a similar freemium model to Spinlet and allows users download music without a subscription. Paying customers spend as little as ₦550 ($1.54) monthly. Also inking a partnership deal with MTN for subscription bundling in recent years. Boomplay for comparison costs about ₦500 monthly and at 75 million users and counting, it is easy to see why the price is ideal.
Spotify still faces resistance due to their historic absence from developing nations, leading users from outside the region to struggle with VPNs and declined forex payments for years, however, they seem to have turned a corner on the continent and at the end of their first month operating had gained 87,000 new users. However, they still face stiff indigenous competition. Prioritising young users has worked well for Apple Music and Spotify in Europe and America and Boomplay’s attempts at capturing this demographic is evidenced by their focus on campus storms around Nigeria and Ghana.
Other market-specific features such as the revolutionary implementation of dual SIM technology in most of the company’s offerings illustrates why their brands rank amongst the most successful on the continent. Tecno’s focus on camera tech to undercut more popular brands revered for their image quality aided their ascent in Africa. Developing some of the best budget smartphone camera systems and easing the entry barrier for users who cannot afford iPhones and Samsungs seems like just a smart marketing ploy, yet it is another indication of Transsion’s purposefulness. Intense research and development efforts into ideal exposure and colour balance presets suitable for capturing darker-skinned people propelled Tecno’s popularity and their Phantom phone series has become a venerable flagship competitor.
Some of their other winning elements include considerably better battery life than the competition (to combat the power issues in West Africa) and a functional network for local customer support, particularly with Carlcare. Such integration is unheard of in Nigeria, save for Samsung whose service centres offer such assistance, albeit with an eight-decade long head start. Carlcare currently owns over a thousand service touchpoints worldwide. A keen understanding of not just their markets but specifically of the people who inhabit said markets sets them apart in peculiar ways; in 2012, the Tecno 3 series launched activities at the Transsion factory in Addis Ababa with the device only providing language support for Ethiopians. Providing the first Amharic keyboard in the world, such specificity is welcome when it not only represents your market’s desires but also because it makes the customers feel top of mind. Taking their ecosystem framework construction a step further, Transsion develops mobile internet services based on self-developed intelligent terminal operating systems (Transsion OS) and coupled with a massive mobile phone user base, they have made inroads into internet service provision. Beyond mobile devices, Transsion’s portfolio extends to the home electronic brand Syinix and Oraimo, a third-party smart accessories vendor service.
The company’s well-documented decision to pivot away from South East Asian countries and towards Africa is one of the reasons behind their success, a move they made permanent by 2008. Since then, many things have worked in their favour: Africa’s poor infrastructural development; weak purchasing power; high point of entry for tech in the last decade and unemployment. In catering to these issues, Transsion has found a way to crack the African problem. The marketing team is also due significant credit for their brilliant product placement and visibility building. Through multiple deals with the EPL namely Manchester City/Tecno and Leicester City/Syinix, they demonstrate a willingness to tap into African culture and interests. It is no surprise all three mobile brands have consistently ranked among Africa Business Magazine’s Top 100 Most Admired Brands.
Transsion’s 2014 return to Asia has seen them develop a new factory alongside research and development centres in India. The acquisition of the Spice mobile brand, a former indigenous OEM (original equipment manufacturer), represents Transsion’s desire to break ground in more parts of the developing world, with the next billion-dollar market targeted. Other developing regions such as the Middle East and South America have also seen a surge of activity from the brand in the last five years as they break ground beyond their adopted homeland, Africa.
The company’s focus on streaming has been a worthwhile endeavour and has been a result of device sales and app popularity. Just as Apple’s proprietary music app comes pre-installed on all their devices, Boomplay appears on every piece of Transsion hardware they release. With a 48.2% market share of Africa’s smartphone market, the company has effectively put Boomplay in the hands of millions of users. At 75 million users and counting, it is clear to see why Boomplay is at the centre of all the things Transsion does right.
As users adopt longer replacement cycles for their devices due to a myriad of economic reasons, manufacturers recognize the importance of building better future-proof devices and leveraging the services in their ecosystems to maintain user spend. While the Sub-Saharan economy looks set to rebound from the COVID-19 induced pandemic, the average consumer prices in the region also look set to rise to 16% this year. Coupled with a low-income average, budget-friendly devices with competitive specs will only increase in popularity throughout the region. Additionally, this means users are more likely to maintain their devices rather than replace them, a future that suits Transsion and their army of loyals.
George Zhu Zhaojiang (Transsion’s founder) might just be Africa’s Chinese Steve Jobs if Transsion continues on its current trajectory. Certain factors such as their capture of markets outside their original region, matching user needs with product implementation and focusing on budget-friendly devices deviate Transsion’s approach from Apple’s. However, the specific approach Transsion has undertaken perhaps speaks to Apple’s sense of innovation and the eventual domination that occurred as a result, by limiting the need for third-party apps on their devices they created closed systems and by providing a one-stop-shop ecosystem they ensured customer loyalty to the brand. While Android might be an open-source system, Transsion’s customization of the OS has seen them rise to the levels of companies many years older and many dollars richer; all while providing value to a market deemed unable to compete.