Product-Localization Advantages
I wrote few days ago that electricity could remain a weak point for companies to establish electronic factories in Nigeria. Samsung had noted that Nigeria's infrastructure challenges would affect establishing smartphone making factories in the country.
Some have disputed that point, noting that some companies in Nigeria are thriving despite the use of generators in their businesses. A commenter noted on LinkedIn thus:
I disagree with you sir, no companies or products demands more electricity than telecoms. I can tell you from experience that the demand for power in this sector is very enormous and yet the telecoms companies are still thriving despite being faced with a lot of challenges other than power. I think any company can make it in Nigeria, depending on their business modules.
This is my response; would use same to respond to such points:
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Sir, you miss a key point. The competitions in Glo, MTN, 9M and Airtel are localized and bounded. Everyone is doing the same thing. The implication is that all the factors affecting location and localization of industries cancel out internally . Glo, MTN, etc are not competing against AT&T USA and Orange France. Their competition is bounded by geography of Nigeria.
However, making smartphones as Samsung does is not bounded by Nigerian geography since anyone can buy phones from any place. Your telecom example is not adequate unless a Nigerian can get a phone line from Verizon USA and Orange France unconstrained by geography.
Should that happen, then the market efficiency in U.S. and Europe would then affect price positioning thereby pushing local companies (like Glo and MTN) that use generators into disadvantaged positions. Right now, those generators do not matter since Nigerians have no option but to get the GSM numbers from them, and they can effectively recover the expenses in their pricing models. Yes, they increase prices because there is no alternative. With that, the telcos can increase price because of their product-localization advantages [phone numbers can only be obtained from Nigerian telcos]. Samsung cannot do that because smartphones can be imported from anywhere.
Telephony business of assigning numbers is product-localized. Smartphone business is not localized. The former does not experience the global price-wars because the products are bounded by national laws.