Phone firms turn to software vending as smartphones exhaust Kenyan market

Kenya has embraced the smartphone technology much faster than its peers in the region and phone makers are changing tack to remain relevant in a market that may soon lose its profitability in device vending.

As of June, there were 35.2 million smartphones in Kenya, a 14 per cent increment from the 30.7 million recorded in June 2023, translating to a penetration rate of 68 per cent, meaning that nearly every adult has a smart device in the country, based on latest statistics by the Communications Authority of Kenya (CA).

Should the rate of growth persist, within the next three years, there will be a smartphone for each of the 51 million Kenyans, as feature phones also fizzle out in equal measure, an indication that smartphone sellers’ margins will significantly drop.

To keep up, many industry players are now pitching new software products to take advantage of the growing smartphone and technology adoption, and to remain relevant in the market.

“Yes, smartphones have generally made a great entry into the (Kenyan) market, and we have around 60 to 70 per cent of the population now on smartphones, meaning that they are able to consume cloud products and software that are on the net,” says Brian Wahinya, team lead of engineering department at Huawei Kenya.

Huawei, a leading smartphone manufacturer, is among the companies that have turned to vending software solutions in the Kenyan market, while smartphone and other hardware devices remain their primary focus in other markets across the continent.

Read: Huawei launches own operating system to rival Android

Last week, Huawei started to market its Artificially Intelligent Call Centre (AICC), an AI-enabled customer support software, targeting small and medium sized businesses in Kenya.

The software, which has been around for almost two decades now, had previously just been sold in advanced markets like the US and China.

Wahinya says the company has started to market the software in Kenya because there’s a “large uptake by Kenyan institutions of these solutions, the call centre solution for instance, and we’ve realised there’s a large need for these solutions in Kenya.”

An excellent opportunity

In addition to AICC, Huawei has also started selling cloud or online storage solutions and AppCube, an online software that allows developers to create systems without the need to code, in Kenya.

All three software are still not available in Kenya’s neighbours Uganda and Tanzania, for instance, whose smartphone adoption rate are still lagging.

In Uganda, there are currently 15 million smartphones, according to the Uganda Communications Commission (UCC), meaning that only 67 per cent of the population aged over 18 years have a smartphone and the overall smartphone penetration rate is just 30 per cent.

Tanzania has only 22 million smartphones as of September 2024, translating to a penetration rate of just 33 per cent, according to the Tanzania Communications Regulatory Authority (TCRA).

For these two countries, phone makers still see a significant opportunity in selling smartphones long into the foreseeable future, and the tech advancement may not be ripe enough for the software products.

Read: East Africans to pay more for smartphones

Huawei is not the only phone maker venturing into the software business in Kenya. Nokia, Tecno, Samsung, and local assembler M-Kopa, have all recently announced new software or add-on features they’re now marketing in the local market.

Nokia, for instance, which is a pioneering phone maker and is credited for making majority of the feature phones used in Kenya in the early 2000s, exited the phone manufacturing business in 2014 and is now seeing a potential market for its software products in Kenya.

The Finnish tech firm last month launched its Ava Fixed Network Software, a Cloud Storage service, and a raft of other software solutions in the Kenyan market, mostly targeting telecommunication firms and mobile network operators.

Chinese manufacturer Transsion Holdings, which owns the Tecno smartphone brand, has also evolved into marketing AI software and companion robots in the Kenyan market in efforts to diversify its business.

The first units of Tecno’s Dynamic 1 robots – AI-enabled companion and entertainment tools, which have been around for nearly a year, hit the Kenyan market in October, and are targeting high-end tech-savvy users.

Samsung has also integrated AI solutions with most of its high-end devices now marketed in Kenya, while M-Kopa’s locally assembled devices now have a health insurance and device protection add-ons, both in efforts meant to ward off competition in an increasingly declining market.