Mxit is Imported into Kenya

Mxit is a massive mobile social network that was started in South Africa a couple years ago. Today, Safaricom announced a partnership with them, using their marketing muscle (7 pages of ads in today’s newspaper) to import Mxit into Kenya.

Mxit launches in Kenya

[For the time being, we’ll ignore the complete ripoff of Twitter in their marketing...]

Mxit is a free instant messaging platform that uses the data network, thereby making it cheaper per message than sending an SMS. They claim 19 million users, most a younger demographic, who spend time chatting with friends or in chat rooms. MXit also supports gateways to other instant messaging platforms such as MSN Messenger, ICQ and Google Talk.

Mxit user growth

Local apps and entrepreneurs react

This should be a slap in the face to Kenyan programmers and tech business entrepreneurs. The model to build the same type of mobile social network has been openly working and available to do for at least three years.

To be fair, Mbugua and the Symbiotic team tried to create something like this a year ago, called Sembuse. Both he and Idd Salim aren’t very happy about this latest move, claiming that Kenyan entrepreneurs can’t get the same access or opportunities as their South African counterparts.

From Mbugua:

“The issue is not that they have a partnership with Mxit but that from personal experience, local developers and companies suffer greatly in their quest to have such partnerships.”

From Idd:

“Most likely, the marketing retards at Safcom were convinced to believe that Mxit will increase data ARPU for Safcom. Mxit is meant to be a replacement to SMS. … So Instead of sending an SMS, you will use Mxit. Safaricom will lose KSHS 3.5 per SMS, but gain KSHS 0.003 per data exchange over Mxit. Talk of Safaricon Conned! Pwagu amepata pwaguzi.”

The issue with Safaricom

On one side, the Sembuse team have a point. Safaricom has been promising to open up their API and platform for real extension. This has never been fulfilled. They have promised to (honestly) engage with the local programming community, and this hasn’t happened either. They were publicly called out on all of these facts and more at the Mobile Web East Africa conference this year.

In many ways Safaricom walks arrogantly through the Kenyan market, lying, stealing and cheating their way to even larger profits. However, they also push the edges. While others are happy to sit back and make their current margins, Safaricom takes risks and eats their lunch. Innovation, whether it’s home built, bought or stolen still has the same effect.

Business reality

For whatever reason (marketing, value add, etc), Sembuse didn’t catch on – it hasn’t reached critical mass. Numbers of users, rather than technology ability even when it’s better, are the things that larger companies are looking for in this type of play. If you don’t have half a million users, you aren’t even in the game.

Though I’m no Safaricom apologist, I can’t fault them for making a decision to go with a tested product from an established business. Yes, SMS is currently a cash cow, especially here in Kenya. However, everyone can see the writing on the wall: data is the future, and controlling the channel is more important than anything else.

As David Kiania from the Skunkworks list noted, “Rule No. 4 in business: Cannibalize your revenue and business model before your competition does it for you.

I’m more disappointed that no Kenyan company has been able to make a go at this by themselves, just like Mxit did years ago. You don’t need Safaricom or any other mobile app provider to be successful in this space, Mxit if anything, has proven that.

Like I said 2 years ago, this is a sure win if you can pull it off correctly. The technology to do this is not new, as Idd Salim points out as well, neither is the model – so you know that the strategy here is on marketing and communications to show the value add to potential customers.

More than anything else, Kenyan entrepreneurs should be upset with themselves for missing a sure opportunity, not upset with Safaricom for making a good business decision.

Location, Mobiles and Social Networks

It’s all beginning to come together, at least on the fringe where all of us technocrats live. Social networks have been humming along quite nicely, many people you know are now part of a service like Facebook, MySpace, Twitter, Bebo or Mxit. On the edges, some applications have started to pair up location-based services around them, thus the rise of smaller applications like FireEagle, Loopt and Brightkite.

What’s always seemed to be missing is a way for location, mobile phones and social networks to coalesce. A way for you to communicate with people, be it updates, comments or chat – and then apply location to that as you chose. Those social networks that tried to do it all couldn’t do it at this level, because they didn’t have critical mass (such as Brightkite). Those that had reach, like Twitter or Facebook, don’t have a simple way to play with location for everyone.

Enter Google Latitude

Just over a week ago, Google Latitude launched. It’s a location-based service that mashes up Google’s own mapping products with Google’s communication products; Gmail and gTalk (chat). One week later, they announced that a million people were already using the service in the 27 countries that they had released it into.

Google Latitude Screenshot

While people are discussing how great the technology works, and it does seem to be quite impressive if you carry one of the supported smart phones platforms (BlackBerry, Windows Mobile, Symbian and Android), I believe there’s something even bigger going on here. Google has not had much success in the social network space, so they are taking a rather nontraditional approach to getting embedded into people’s lives at a much more foundational level. Gmail has a base of 50 million+ accounts, and each comes with a chat service, which has gained quite a bit of popularity. Not to mention, SMS was enabled within chat just a couple months ago, in December.

What Google appears to be doing, is leveraging its massive user base, tied together through email and chat services, and pairing it together into a larger community that works within it’s mapping infrastructure.

(Putting on my Ushahidi hat, this has some pretty big ramifications for disaster and emergency work in locations where Google use is heavy.)

The competition

It also has the potential to change the game for some other large services. What happens if people start using Google Latitude for their status updates instead of Twitter and Facebook? What service do you use to find out what’s happening on a Friday night?

It will be very interesting to see what types of reactions to this service arise out of the large social networks, especially those with a large international footprint. Getting location, mobile and social networks to play together isn’t easy, yet these organizations will not sit by as Google whittles away at their empire.

Here’s something to think about. If you didn’t realize this before, pay attention: the big international showdown in this space is between Google and Nokia in the coming years. They have been gaming each other for over two years, and as the race to the edges begins, you’ll see them come head-to-head more often.

Nokia Ovi

1.5 years ago Nokia bought mapping service Navteq in a mega-deal at over $8 billion. Last summer they launched Ovi, which allows remote sync capability for photos, contacts and calender, gains access to music and games, and marries up their mapping and sharing capabilities. It’s what Nokia is banking on for their consumer value-added services in the future.

I’m not sure who will win out on usage in the end, but I do think that Google’s Latitude is an incredibly strong and under-the-radar type play that should be watched very closely. One thing is for sure though, the organization that opens up for easy third-party development on their platform will have a better chance.

Microblogging, Location and Emergencies

I’ve been using Twitter for a while now, and have thought quite a bit about it in Africa. More, I’ve thought about what the ramifications of Twitter pulling out of the global market means, and then thought quite a bit about Jaiku, Laconica and Mxit and various other chat/microblogging applications. There is, without a doubt, a move towards short-form updating via mobile and web, and it needs to be federated.

There’s something missing in this new mobile + web microblogging movement, and I think it’s location.

Thoughts on location and microblogging...

Why Location Matters

Most of us use these services for updating, and being updated, by our friends and interesting people. That’s the main use, and it will remain so. The truth is, you and I don’t really care to hear what any random stranger is doing, even if they are nearby. However, we do care what is happening on a very hyper-local level in the case of emergency or “big event”.

It’s somewhat like the “pothole theory” that I talked about earlier: you wouldn’t normally care about the pothole on a steet, unless it’s yours. It helps explain why we care about certain things.

If you use Twitter and have an iPhone, you’ll probably be aware of Twinkle – it’s an application that enriches your Twitter experience. In Twinkle, you can set your location and then a certain radius from which to receive twitter updates, even if they’re from perfect strangers. I think that’s the beginning of what we’re talking about.

However, again… I don’t want to just get updates from random strangers in my locale. I want to only receive the ones that are “important” to me. I want to be notified when there is an emergency, major traffic jam or something else pertinent to me.

The “What if…”

What if we created a way that a greater federated system of microblogging applications could also use location as an alert point?

Of course, my current world is colored by Ushahidi, crisis and emergency news coverage. I think of the ability to anonymously send in reports to a system like Ushahidi running in any country, and those who are part of this greater, extended and federated network would be updated – even if that person was unknown and anonymous.

Federated Microblogging, SMS and Location

Here’s a use case:

John is a Twitter user in Accra, Ghana. Anne has setup a local Laconica server with 5000 users in the greater Accra area. Eddie is not part of any of these networks, just an average guy with a mobile phone. Ushahidi is running in Ghana.

Users from the Laconica group can setup an “alert” for a specific radius from their location using Ushahidi, linked to their Laconica account.

An earthquake happens and Twitter and the Laconica server are ablaze with dialogue about what is happening. Eddie (our normal guy), sends an alert into the Ushahidi number, along with hundreds of other Ghanians who are not part of Laconica or Twitter. Anne, and the other Laconica users are receiving alerts (web and mobile) from within their set alert radius automatically, from completely anonymous people. Alerts on where people are trapped, who is missing, who is found, where not to go, and where help is needed most.

John, our Twitter user is updating Twitter, but it has no little local implications due to not being able to be used in Ghana (except via web). Local mobile users aren’t receiving his updates, and he isn’t receiving theirs.

I recognize that there are a lot of things going on in this scenario, and it’s imperfect, but it serves as a good setting to discuss some of the shortcomings of the current situation and the possible growth areas for them. It also talks to even bigger ideas and the greater impact in Africa of a real social mobile network that can connect people using only mobile phones and do it as needed.

There are some interesting things to learn and apply from location-specific alternatives to global SMS gateways (like FrontlineSMS), and I wonder where tools such as InSTEDD’s SMS GeoChat can be used here too.

More to come on “getting updates that matter” later, this is just some initial thinking on it. I’d love to hear your thoughts too.

An Opportunity to Make Real Money in Africa

Just today Google has shown that they are willing to invest in African mobile phone businesses. Does Google’s purchase of an equity stake in Mobile Planet mean the big web/mobile money will start flowing throughout Africa? Not necessarily, but it made me think of a conversation that I tend to have a lot in my travels.

The topic of conversation usually turns to this; what type of web or mobile application can you build to make some serious money in Africa? Though there are many answers to that question, as I believe there are many options for successful web and mobile companies in Africa, there are only a few that I think of as “sure things”.

Any entrepreneur is looking to either a) create a company with solid cash flow and grow it, or b) create a solid company with value and then sell it (or have an IPO). On the web that takes some well-known paths, and the most common is option “b” where the entrepreneur’s sell their company to a larger web entity (Amazon, Google, eBay, Nokia…etc).

A “Sure Thing” Formula

Create a Jabber-based chat application that works on the mobile phone and the web, grow it to a 1-2 million users within a region, sell to Google.

Why does this work?
You build your chat application with Jabber since it can interface with Google’s GTalk. Jabber is free, and also happens to be the what a couple other major applications are built on (see South Africa’s Mxit). Google is trying to grow in Africa, and I assume would be extremely happy to pay a very healthy amount of money to acquire an application with millions of active users that is built on the same protocol as their own chat system.

Hand Holding a Mobile Phone

Challenges

The formula for this particular idea is built on two premises. First, that you can actually get a couple million users within an African region using your chat application. Second, that Google wants more users on their platform(s).

The first challenge is born from the fact most mobile phone users in Africa don’t use data enabled phones, so they can’t run a Jabber application on their phone. Mxit’s answer to this in South Africa was to show that for 10% of the cost of a normal SMS, you could send a message through their system (which happens to be a highly bastardized customized Jabber app). Your goal is to get people who don’t have a data enabled phone to upgrade to one.

The second challenge is beyond your control. You’ll never know if Google wants to buy you out until they come knocking. However, if let’s just say you shouldn’t have to many problems monetizing a system that has 1-2 million users on it anyway…

Your goals to overcome these challenges is found in tapping into communities and spreading your app virally to gain critical mass with speed. Once it spreads, the first application like this to reach a decent amount of saturation will be the winner, even if it has some faults (see Twitter).

Opportunities

Though chat is the core of your application, that is both web and mobile phone accessible, it’s not the only value added service that you can provide. With some creativity, you can add services that allow more people to tap into, including locally relevant events, news, marketplaces, personals, jobs, etc…

On top of these services, you’ve got the advantage of building on an open source platform that other services use as their core.

Lastly, and most importantly. If you were to reach even 500,000 users you would have an incredibly viable opportunity for advertising revenue. The ability to target specific advertisements, or sponsorships, through the platform make it a marketers dream. Basically, you might not need, nor want, a buy out after all.

In Summary

Is it really a “sure thing”? No, every business move has inherent risk and depends on execution of the strategy.

Is it a good basic idea that could be built into a real product with a solid exit strategy? Yes, undoubtedly so.

We’ve already seen the booming success of Mxit in South Africa. There’s no reason to believe that you couldn’t have a margin of that same success in East, West or North Africa with the same type of service. If you build it with an end-goal of Google integration in it at the end, you also set yourself up for a real possibility of a buy out.

On the Road to Kenya (and links)

I’ll be offline for the next couple days as I hit the road for Nairobi. I’m arriving just in time for the Safari Sevens rugby tournament starting Friday, and will be in Nairobi until the end of the month. If anyone wants to get together, shoot me an email.

I thought I’d leave everyone with some links to stories that I’ve enjoyed over the last week.

  • Mobiles in Africa – one of the best articles I’ve read in a long time on the mobile phone in Africa, by Ken Banks.
  • Few people can write long interesting articles, but some have the skill to do it. Ethan Zuckerman writes another thought provoking post on the architecture of Serendipity.
  • Find a job in Kenya using SMS on Kazi560:
  • myKRO – A new blog about the world of microfinance. They’re looking for contributors, especially from the field in Africa.
  • A nice article on how to get the most out of your thumbdrive from Freelance Switch.
  • 50 Questions asked and answered about Android on ZDnet.
  • Through Mobimii, MXit users are no longer bound to the MXit service. Breaking news by Charl Norman for Mxit users in South Africa.

More in a day or two, once I land…

South African Tech: A Tale of Two Success Stories

There are a number of technology companies from South Africa that have had no small amount of success. I want to take a minute to highlight two of them though, because I think they show something important.

The decision you have to make when deciding to create a technology business, a web or mobile application in Africa, is whether it’s something for the local market or international. Very few companies are solving for both. In my examples you’ll see Mxit, a company solving for a local problem, and Synthasite, a company solving for an international problem.

For those who don’t know, Mxit created a java-enabled chat application for mobile phones that decreases the cost per message compared by ~90% of a normal SMS message. They have over 7.5 million users after just a few years in action, and are the staple communication system for young mobile users in South Africa. It’s a phenomenon, and they’re looking to expand internationally.

Mxit Users in South Africa

Synthasite is the free web site creator and publishing platform, designed and created in the mold of any Web 2.0 app coming out of the Silicon Valley. Vinny, the founder, tells me that they have over 70k users and are increasing that by 1000 each day – which puts them as one of the top 3 services like this in the world. They have just moved 1/3 of their operations to San Francisco, with 2/3 of the company still in Cape Town.

Synthasite

Both of these companies had completely different strategies: local and global. These companies serve to prove that any developer in Africa with a good idea that solves a problem, and has the drive to see it through, can be incredibly successful. It’s inspiring, and I hope that more of Africa’s web developers will see the opportunities all around them.

[Image courtesy of Rafiq via Flickr]