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News Article

Mexicans Willing to Pay More for a Smartphone Despite COVID-19

By Andrea Villar | Wed, 09/02/2020 - 13:21

For the first time in many years, the average expenditure of a smartphone buyer in Mexico exceeded MX$4,000 (US$183) in 2Q20, the period in which the COVID-19 pandemic had the greatest impact in the country.

This increase reflects people’s effort to acquire higher quality equipment with better features, according to an analysis by the consulting firm The Competitive Intelligence Unit (CIU). The firm also points out that this reflects a systematic increase in device spending, as well-known manufacturers have moved out of the low-low range while they are on the way out of the low-high range. The average spending increase comes in the midst of a complex scenario brought by the COVID-19, which has hit the entire smart device and telecommunications services industry and led to the closure of brick and mortar stores. In 2Q20, AT&T, Telcel and Telefónica showed an impact on their revenues, mainly due to the sharp drop in equipment sales. 

According to the CIU, the telecommunications and information technology industries (ICT) are perhaps the second essential sector, just after the health sector, due to their relevance for people and companies in supporting social, educational and social life.

"In its long-term dynamics, this sector has been characterized by being procyclical in times of economic boom and countercyclical in periods of recession," said Ernesto Piedras, Managing Partner of the CIU in the report. However, the health crisis and its macroeconomic impact have wreaked havoc in many industries and the telecommunications sector has been no exception. According to Piedras, the Mexican economy does not face one, but two crises: the first caused by the economic policy of the current government that has already brought recessive effects since 2019 and the second caused by the pandemic.

OXXO Goes for the Low-Cost Market

Starting this month, OXXO, one of the best-known convenience store chains in the country, will be selling a new smartphone with the KaiOS operating system at a price of MX$599 (US$27). The company said users will be able to use apps like Facebook, WhatsApp, YouTube or Google Maps, among others. KaiOS is a Linux-based mobile operating system from KaiOS Technologies, a Hong Kong-based company focused on emerging markets with a lack of digital services penetration.

KAIOS has more than 140 million users worldwide and with this alliance, the company goes further in its expansion process in Mexico. "With the launch of this smartphone, OXXO seeks to improve its value proposition, offering quality products and services to meet the needs of our customers,” Denisse Camacho, General Merchandise Manager at OXXO, said in a statement.

Photo by:   Gian Cescon, Unsplash
Andrea Villar Andrea Villar Journalist and Industry Analyst