Johannesburg-based Onyx Connect is betting on local talent to build affordable Android-based smartphones for the African market after inking a software licensing deal with Google. After receiving a 150-million rand ($11 million) investment from undisclosed investors, the company hopes to start making the new phones as soon as next year.
To date, Onyx has produced the Nexa smartphone and the Onyx tablet by sourcing manufacturing, logistics and supply networks from China. But a recent license obtained through Google enables the company to include Android and Chrome software on its own manufactured devices. Onyx says it will eventually produce $30 devices that includes a camera and 1 gigabyte of memory. News of the Google deal was first reported by Bloomberg.
Onyx co-founder Andre van der Merwe is banking on the sluggish performance of the rand to make the country a more attractive exporter of consumer electronics—market which has long been dominated by the likes of China, Taiwan and Korea.
“Everyone is trying to build cheaper, but we are planning on subsidizing the hardware using a software platform that helps us generate money,” says van der Merwe.
Low-cost smartphones, along with relatively affordable subscription models, have been key to the continent’s digital revolution. Smartphone adoption has nearly doubled over the last two years to 226 million devices, leaving ample room to supply the continent’s population of 1.216 billion. Industry body GSMA estimates Africa’s mobile economy generated 0.6% of GDP in the region.
The surge in smartphones has been made possible by the mass manufacturing of entry-level Android phones in China, says Arthur Goldstuck, technology analyst of World Wide Worx. “Even taking import duties into account, it’s difficult for local manufacturers to compete. It is possible, however, with very smart production, packaging and marketing,” adds Goldstuck.
South African telecom giants such as Vodacom and MTN have introduced their own ranges of budget smartphones below $50. Goldstuck adds that another challenge for companies local manufacturing is that tier one names like Alcatel, Huawei and Vodafone have a strong hold on the entry-level market, and have already plucked the low-hanging fruit. However van der Merwe notes that these models are often not sustainable and there’s been a global shift to focus on high-end products which the company will eventually produce at an affordable consumer price.
“The world is our oyster. There is no reason why this can’t be done in South Africa. If we have great quality and price there’s no reason not buy from us.”