From his desk against the wall, Nadir Dinani, sales manager at PC World in Uganda, greets a steady stream of customers as they flock to his Kampala shop looking to buy brand-new computers. "Schools are buying lots of computers for their students, assembling networking labs," he says. "Big government institutions and NGOs have funds. Students are coming to buy for their personal use." Looking back on sales for 2013, Dinani smiles. "We know it was a good year."
Dinani has been working in the industry since 2010, and he explains that since then, the number of PC retailers in Uganda has boomed. "There are many more. Business was good for everyone," he says.
If PC World's success is typical of computer shops across the continent, it's dramatically out of step with the rest of the world. "Computer sales in free fall," cried the headline of a Wall Street Journal article last year, describing the worst decline in the history of the PC market. Research firm Gartner reported that global shipments dropped a spine-tingling ten percent in 2013, as consumers took more and more of their computing to tablets and smartphones.
But in Africa the personal computing industry is in its heyday. Analyst firm IDC reported in January that shipments to East Africa had risen by three percent in 2013. In individual countries the numbers were much higher: Uganda saw PC shipments rise by 20.1 percent last year, and Ethiopia by a staggering 31.7 percent. Since IDC only tracks legitimate, taxable sales and does not take into account the 'grey market', the company admits that the real figures are likely to be significantly higher.
The starting point for such growth is, admittedly, quite low. As of 2012 only four percent of Ugandan households owned a computer, according to the International Telecommunication Union, and in Ethiopia the number was only slightly over two percent. Still, the numbers point not only to a growing middle class in Africa, but also to an increasing awareness of the value of a computer.
"People are starting learning the computer. Now they are growing their businesses using computers and it's helping them a lot," Dinani says. "They know now how to use a computer and how to keep reports for their small businesses in their personal PCs."
Laptops and desktops
Eager to tap into a new market, manufacturers have been racing to provide the cheapest laptops available in Africa, pushing prices lower than ever before. "I don't even know how they are surviving," says James Mutua, a research analyst at IDC East Africa. "They are pushing some products very cheap, with low margins." Toshiba offers PCs for as little as $220, he says, and cut-throat competition with Lenovo may force them to drop prices even further.
All of this attracts African customers who might not otherwise consider investing in a computer at all. But there's another factor that makes Africa stand out from the rest of the world: the conspicuous absence of the tablet. "When you check more mature markets you see tablets cannibalising the PC market," Mutua says. "In Africa, except for South Africa, you don’t see the cannibalisation."
Kenya, East Africa's biggest computer market, shipped around 450,000 PCs last year compared to only 160,000 tablets. The main reason for this, says Mutua, is that the price of tablets remains high compared to the cheapest PCs. Plus, he says: "I think people don't realize why they need a tablet."
Consumers might not realize it yet, but telecom operators like Safaricom and Airtel are determined to open their eyes. This is because the highly portable tablets, on average, pull in a higher revenue per user when it comes to data. "People who have tablets consume more data than those who are using PCs," Mutua says. Kenya's Safaricom has a target of selling around 150,000 tablets by the end of the year, he says, and it has been deploying its extensive network of distributors to do so.
"In 2012 one of the biggest channels for PCs was telecom companies — if you would go to Orange shops, you would go to Safaricom shops and Airtel shops, you would see more PCs. But currently now they are doing more tablets and smartphones, because with telecom companies it's about data."
Another blow to the PC market came from the abrupt exit last year of Samsung, who, in the fourth quarter, stopped shipping its inexpensive PCs to East Africa, preferring to focus exclusively on high-end products. This will undoubtedly mean fewer sales in the short-term, Mutua says. "The space that they left, these other vendors, Toshiba and Lenovo, will take advantage of that to push even more of their products. So the cutthroat competition will continue."
Since it will take time for mobile operators to change consumer spending habits, serious cannibalization of the PC market is unlikely to happen in Africa within the next three years, Mutua predicts. Operators like Safaricom are working with manufacturers to develop inexpensive tablets that can compete with the likes of Toshiba, but prices are still too high. "Until they get a variety of products retailing at around $150-200, I think that's when we might see changes," he says.
But some can already see those changes on the horizon. Dinani notes that all 375 of Uganda’s MPs were recently given iPads, and "now all the MPs are using tablets instead of computers". And it isn't only public servants who have started coveting the sleek slabs. "They keep bringing offers to attract customers in Uganda to go for a tablet instead of the big, heavy laptops," he says, pointing to a display of discounted Lenovo tablets. "It's portable and easy to use. People are showing their interest, and customers are buying and trying them."
Retailers like PC World are watching closely. The mighty PC is still king of the jungle, but its days may well be numbered.