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Where Africa and Technology Collide!

Tag: nairobi (page 3 of 7)

The “Nokia: Innovating Africa” presentation

A special thanks to all of the commentors from the last couple days who gave of their opinions to help Nokia think differently about innovating in Africa. It was these comments that I channeled, where I served as a messenger to tell the Nokia executives who flew in from all over the continent and Europe for this meeting in Nairobi.

Nokia: Innovating in Africa talk

Points made in the talk

[Note: most of these points came directly from the readers on my last post.]

First, stop treating the Middle East and Africa as a single region. If you’re serious about Africa, treat it as its own region.

Second, stop colluding with the operators and start colluding with your customers.

The mobile space is more nuanced now, it’s difficult to create a handset that will change your fate, instead it’s a mixture of software, apps, web platforms and data costs (as well as handsets) that decide your future.

Engage developers, third party programmers and businesses is where innovation comes from, not a large, slow company.

Standardize your UI and OS, strengthen your APIs. Get out of the way and let software developers innovate on a platform.

Make it easy for developers to make money, even in Africa. Figure out a way that people get paid and can bill via your server-side offerings like Ovi.

Take some of the big money that’s being thrown at high-profile “global social change competitions”, which generally attract Western organizations, and do more smaller-scale work at the grassroots level.

A large percentage of users can’t afford the data plan to get on your own websites and the Ovi store. Zero rate them. There’s no reason you shouldn’t be eating Facebook’s, Twitter’s and Google’s lunch in this, as Nokia has deeper penetration with mobile operators than almost anyone else on the continent.

Consider a specialized site for Africa, loading fast on low bandwidth.

You were too slow on the dual SIM card movement, that if anything showed you had lost your innovative practices in the emerging markets like Africa.

Today it’s driving the cheapest candybar phone to the lowest possible price. Good, keep that up. While you’re doing so, make the battery last longer and keep thinking of great ways to recharge it (solar or bicycle dyno).

But, look ahead are realize that even here in Africa, people want Smartphones with real web browsers, social networking and entertainment apps. Do it for under $100.

You don’t want to hear it, but I’ll say it anyway. Software isn’t your strong point, hardware is. Consider embracing Android.

How about a multi-touch dual-SIM Android smartphone for under $100… can you do it?

SD cards = digital storage. In fact, provide these with content already on them, including books, encyclopedias, etc.

Cloud-based services, including heavy application processes, would mean deeper penetration into phones with less RAM, content backup, and a content creation and sharing link that is still untapped.

Be the first to implement 802.21 in your handsets, allowing a seamless handover from WiFi to GSM/GPRS. Lead the charge to fully IP-enabled phones.

Finally, nothing will get better by holding to the status quo and slipping into mediocrity. Now is the time for daring exploits, especially in the places with the most growth potential and where your competition is either light or weak.

Africa is ripe for experimental phones and financing models, what is new coming out of Africa first?

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.

MKesho: Linking Banks and Mobile Payments

M-kesho banking with mobile phone in Kenya

People are excited about M-Kesho (money for the future) which launched yesterday, where Safaricom has linked their mobile payments service Mpesa as a joint venture with Equity Bank in Kenya. This basically extends Mpesa into a bank and insurance company, with the future offer of microcredit as well.

  • Equity bank has 80 branches in Kenya.
  • Mpesa has 17,500 outlets in Kenya.
  • There are approximatey 8.4 million bank accounts total
  • Equity has about 4.5 million bank accounts
  • Mpesa has 9.5 million users
  • Kenya has 107,000 credit cards in circulation

See the pattern? These are are big companies with huge local connections and inroads into the popular culture. This is a strong indicator that every Kenyan will have access to banking and insurance via mobile phone very soon.

“This is a bank account introduced by both Equity and Safaricom where customers can earn interest from as little as 1 Ksh. Customers can withdraw cash from their Equity Bank Account to their M‐PESA accounts and customers can also deposit through their M‐PESA accounts to their M‐KESHO Bank account. Other features of the account include Micro credit facilities (emergency credit availed through M‐PESA), Micro insurance facilities as well as a personal accident cover that translates into a full cover after 1 year. For one to open this account, the person must be an M‐PESA subscriber.”

Reality Check

As others have pointed out, there have already been links between mobile payment systems like Zain’s Zap and banks like Stanchart. So, this isn’t exactly groundbreaking and new. Why is it big then? It’s big because of who is doing it: the giants of the banking and mobile sector.

Rombo has written a particularly good post about M-Kesho. She asks some hard questions, like who really benefits out of this deal: Equity or Safaricom?

It’s hard to say, but I wonder if the pressure put on by regular banks onto the regulator about how close to a bank Safaricom’s Mpesa really has forced their hand. Did they have to choose a banking partner in order to stave off the regulator, or did they do it to increase market share and positioning?

Finally, I think this move, like the moves made by Safaricom in the past on this mobile banking space are shortsighted. Yes, it gets them more subscribers and it does solidify their grip on the mobile market in Kenya, that is working. However, mobile money and payments are much bigger than just one operator or one bank. Becoming the “Visa of the mobile payments space” all over Africa (the world?), is a much bigger deal than being the biggest fish in Kenya’s small payments pond.

Maduqa: Online Shops for Every Kenyan

Maduqa is a fledgling web startup in Nairobi. Their goal: make it simple, fast and easy for any Kenyan business owner to get their own store online in just a few minutes. Surprisingly, there’s nothing else out there quite like this (that I’ve seen), so it’s an excellent example of local entrepreneurs taking ideas from the global stage and localizing them to Kenyan needs.

It’s a simple website, with a focus on two things. First, it’s online shops for ordinary businessmen, whether you operate out of your house, a duka or a business frontage. Second, it’s a classifieds listings site.

There’s a lot of draw in figuring out how to crack the Kenya classifieds market, and the web is littered with a dozen mediocre attempts at this from Craigslist to the Nation Media Group, much less the everyday sites that others throw up. In this case, I think it’s a diversion from what should be the focus: online shops.

We’re starting to see more Kenyans paying attention to the web-side of their business. For most, that just means that they know the internet is out there and might be valuable in attracting customers. Those are your medium and upper-class businesses. The upper-class ones will go out and design their own websites, Maduqa isn’t for them.

Instead, Maduqa is for the businessman doesn’t have any marketing budget to speak of, she might be a hairdresser or a person running their business at night from their home. They don’t have the time, energy or know-how to setup a store on their own, but they could set up a Maduqa site. It’s free too, so the cost of failure is low. Your worst case scenario is that you are finally searchable by name online.

There is a small team of individuals who are going around and trying to sign up new businesses into the site. It’s analog, and not nearly as efficient as if you were running a pure viral or digital marketing campaign, but then their target end-user probably wouldn’t see those anyway. Any other type of marketing is even more expensive and untenable for this bootstrapping startup.

So, let’s say they have three guys walking around town trying and they each aim for 15 new Maduqa shops online each day, that’s 45 shops per day total. Not bad, especially if you extrapolate that out to 20 working days per month with a total of 900 online stores per month added to the website. In three months they would have 2700 online shops.

Now we’re talking some serious mass. Maybe even enough to get on the radars of consumers, especially as all the marketing for the store websites will be done by the store owners themselves, as they tell everyone about their new website.

I met up with Kachwanya, one of the duo behind the site and walked through the site with him, discussing both the pros and cons of this type of service and the site itself. Here is a quick rundown of what I liked/didn’t like, keeping in mind that it’s an early-stage website.

What I like

  • Anyone can setup an online shop now. Conceptually, this is very easy to grasp.
  • Nice use of javascript and overlays that make the site easier to use.
  • There is a team of Maduqa reps going around and signing up new business owners.
  • The potential to take over the online stores market in a country.

What could be improved

  • Scrap the classifieds, stick to one thing: online shops.
  • Let’s see PesaPal (or its equivalent) instituted on this site. I can see no better win-win situation for Maduqa, the end users or PesaPal than this kind of partnership.
  • Parts of the site look nice, but it also feels a little cluttered, some design and usability tweaks would help.
  • Get more feet on the street, sign up more businesses and get up to critical mass even faster.

I’m impressed by this simple and workable concept. They have the technical acumen to do it, there is no doubting that. Will they have the business acumen to balance? Time will tell if they will pull this off, but I’m optimistic that they can.

More Than Just Call Centers: BPO in Kenya

There has been a lot of talk, especially in East Africa, about business process outsourcing (BPO) as a big way to elevate the technology field. The logic is that while many of these jobs might not be super high-tech (ie, programmers), they’re at least in the tech field thereby allowing people to get comfortable with computers and bringing outside investment into the country.

Kenya has a great number of qualified students leaving university each year that. Enrollment in 2008/09 (public, private, part-time) was 122,847, and my friend Bankelele estimates annual graduation at about 30,000.

Kenya’s BPO strategy is best summarized and detailed by Gathara (read more):

“The general thrust of the report is that coming late to the party, Kenya has no chance of becoming a Tier 1 provider; it lacks the scale to become a global player like India or the Philippines. So the suggestion is that she leverages her relatively small pool of cheap, accent-neutral English-speaking graduates, her strong ties to the US and UK (which together account for nearly 60% of the outsourcing market), improving infrastructure and an already thriving business environment, to create a niche for herself in basic sales and customer-care services and attract large international BPO companies.”

(also, read the Kenya ICT Board’s position on BPO)

It’s a sound business area to put resources into, especially if you’re a government entity focused on growing jobs and investing in seeing the technology sector grow. However, I’ve been troubled by the idea that it’s focused mainly on the KenCall-type outfits – basic call centers. It seems that there’s more opportunity here than this. Let’s not sell East Africa short as a low-cost, low-value BPO region, but look more closely at a strategy for attracting higher margin clients for services by highly qualified BPO firms locally.

Shifting the BPO Paradigm

Beyond cloning what India or the Philippines has done, can we rethink the outsourcing paradigm?

Nairobi, due to location, climate and a number of other reasons ends up being the hub of a lot of major corporations (Google, Microsoft, IBM, Nokia, etc), large non-profit organizations (UNEP, CARE, World Vision, Hivos, etc) and a host of medium-sized companies. These represent businesses with large amounts of revenue which is mostly injected from overseas. Why are their business processes being run out of expensive central offices in regions like the US and Europe?

Earlier this week I discussed this with Wiebe Boer of the Rockefeller Foundation in Kenya, who has given the Kenya ICT Board $500k to drive their BPO strategy. He worked on the original McKinsey team to architect the six pillars of economic growth underpinning Vision 2030, of which BOP was one (and the only one being acted upon currently).

He had some good ideas, stretching the understanding of the traditional BPO definition of East Africa, and leveraging bigger organizations to shift their non-core competency work to Kenya. Instead of just outsourcing customer service, think procurement, basic HR functionality, IT, monitoring and evaluation, and accounting.

Last week the NetHope meeting came to Nairobi, their list of member organizations is impressive as far a “big NGOs” go. They represent a lot of money and a lot of potential for business for BPOs here in Kenya. Their supporters are the likes of Cisco, Intel, Microsoft, CDW and Accenture. Together, both supporters and members represent a vast pool of organizations ripe for this expanded type of BPO.

Business opportunities for seasoned entrepreneurs abound. An example would be to build a strong firm that could focus on a couple of the non-traditional outsourcing needs (think M&E and HR). Many corporations and organizations (internationally and locally) need this and don’t have the in-house capabilities to do it right. Groups like the Rockefeller Foundation are poised to pressure the groups that they support financially into using BPO companies in Kenya, so if real viable firm was available, cash flow would be less of a risk than in other enterprises.

Tandaa Kenya Meeting: Local Digital Content

“If Africans are to get online en masse, they need a reason to go there. Their lives, their stories”

– Dennis Gikunda of Google Kenya, requoting Alim Walji who was at Google.org and is now at the World Bank.

The Kenya ICT Board is throwing the Tandaa event today in Nairobi at the iHub, sponsored by Google Kenya. It’s all about getting more local Kenyan content online, and it’s a good mixture of speakers so far, with Dennis Gikunda starting off, giving us examples of successful local content plays.

A “remember when” session just started, talking about how slow the internet used to be just a couple short years ago. Jimmy Gitonga scolds us for not doing more with what we have, figuring out business models and ways to make money off of our fast connections. He also reminds us that 2 million Kenyans access Facebook on their phones today. Moses Kemibaro steps up to give the real numbers showing the costs of internet, and the speeds, that has happened over the last year.

Joshua Wanyama, of Pamoja Media and Africa Knows, is up to talk about “The internet at 500Mb” – how to help Kenyan companies make money online. He’s giving us a short summary of his background, about how he started a web development company from the ground up in the US, then how he’s brought that same mindset back to Kenya.

“If I were to go online and try to find all the dentists nearby me in Nairobi, I couldn’t find it since it has not been digitized yet.” – Joshua Wanyama

Josh goes on to say that we don’t have enough success stories, though he does reference Ushahidi and Safaricom’s Mpesa. We need more of them, as it will help get more young, smart entrepreneurs operating in the internet space. Most of the internet traffic from Africa goes to websites like Facebook, YouTube and Yahoo, all outside of Africa. What are we doing to get our own content up and make it more of a viable business alternative for our own society?

Eddie Malitt of Sega Silicon Valley is here to talk about turning Sega village, a remote village of over 10,000 inhabitants located in Ugenya district – 25 km from the Kenya- Uganda border, into a “Silicon Valley” – an African ICT hub. One of the interesting findings that Eddie shared with us is that the children are leading the training of their parents and other adults. It doesn’t sound like their operations are self-sustainable, but that good things happen due to them being there.

[More of the Tandaa event will be going on today, but I’ll be unable to keep up with it due to other meetings. Follow it on Twitter at #Tandaa or @TandaaKENYA. I’m sure that Moses and Mbugua will also have something up later today.]

ICANN Comes to Nairobi

ICANN is the body that governs the assignment of domain names and IP addresses worldwide. It’s supposedly a non-profit, but their salaries might indicate otherwise. They decide if there’s going to be a new top level domain (TLD), and are behind the present craziness of letting anyone just choose their own TLD. They split the world up into 5 zones, and each year they go to one of these zones for their annual meeting. This time it’s here in Nairobi.

You can see the full schedule of this week’s events here.

The meetings are to be held at the Kenya International Conference Centre (KICC), who as organizers of the space have already fumbled the ball. They’ve double booked KICC on Mon/Tue of this week with the 6 heads of state (and all their security) of IGAD; Djibouti, Ethiopia, Kenya, Somalia, Sudan and Uganda. ICANN is none to happy about this, as stated on their blog:

“With that many national leaders and scores of security personnel arriving at our meeting venue at one time, we expect it to cause severe inconveniences and at times possibly major disruptions for our community members as they attempt to enter and move around the KICC.”

Major items on the agenda:

Here’s a video from Gray Chynoweth where he outlines the topics for this ICANN #37 event including security and remote access, new TLD’s, the .xxx gTLD, DNSSEC rollout, root scaling, WHOIS study and more.

  • New TLDs— a discussion of what the “EOI” (expressions of interest) process will look like for pre-registering new gTLDs. ICANN provides more information on this here.
  • IDN ccTLDs – a status update on which countries that have applied using the “fast track” and where they are.
  • The .xxx extension- will it proceed and when.

iHub Nairobi Launch and IgniteNairobi

The new iHub in Nairobi isn’t completely built out yet (in fact, it’s still basically just concrete and few painted walls…), however that won’t stop us from having a party to celebrate the opening of the new innovation hub here! It starts at 5:30pm (Kenya time) at the iHub (map).

[It’s an invitation only event, just due to the size of the space and how many we can fit. Jessica is handling the invitations, so head on over to this form and fill it out if you haven’t already. If there’s room, she’ll send you a confirmation email by early afternoon.]

Things you should know:

  • There will be eight lightning-style 5-minute talks done by local techies as part of IgniteNairobi (see Global Ignite Week for more)
  • Keeping up to date with the event, we’ll be live streaming it via Ustream here.
  • The first 100 attendees – who are on the list as confirmed -will get one of the new iHub t-shirts designed by the guys at The Ark and printed by Bonk. (Yes, they are incredibly cool).
  • The floorplans and layout for the iHub are about done, but no buildout has started happening.
  • We’re having a cocktail tonight, so it’s drinks and bitings/hors d’oeuvres.

We’re looking forward to everyone coming over and seeing the new space, thanks for being a part of it!

Quick Hits in the African Tech Space

Indian firm Bharti buys up Zain Africa
The biggest news in the African tech space is Bharti’s $10.7 billion purchase of Zain’s African operations, which operates mobile networks in 17 countries in Africa. Apparently, some believe that Africa’s potential makes Zain deal value fair. (Zain’s African countries: Burkina Faso, Chad, Democratic Republic of the Congo, Republic of the Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone, Tanzania, Uganda, Zambiaand Morocco.)

Google continues getting Africa on the map

Google Maps was launched in 30 Sub-Saharan African countries
. That’s an amazing asset for everyone to use, and it’s also an incredible testament to the number of users using their “My Maps” feature, as this is where this data comes from.

On the growth of tech hubs in Africa
Rebecca Wanjiku wrote an article on IDG about, “Tech labs move beyond corporations in sub-Saharan Africa“. She’s a member of the Nairobi iHub advisory group, and has more insight than most in this space.

South Africa’s Design Indaba
It’s happening right now in Cape Town (Feb 24 – 26, 2010). Great design, and great speakers, but I was really intrigued by their kids program.

Location based service launches in Nigeria
StarTrack is a new location based tracking service in Nigeria, Loy Okezie has a good overview of this new service from Starcomms.

Mobile Web East Africa – Stream

[I probably won’t be able to keep this up all day, but I’ll try to blog/stream what’s happening here at Mobile Web East Africa as best I can. Refresh for updates]

It’s day one of the Mobile Web East Africa conference in Nairobi. This is a new conference, started up in South Africa to great success, and now spreading to other regions of the continent.

Paul Kukubo of the ICT Board

Paul Kukubo, of the Kenya ICT Board, is talking about the future of tech in Kenya, and how the government’s aim is to be a major hub for technology in the region. Explaining how the changes in the industry are brought into context for the government’s vision 2030. He talks about mobile payments, digitizing of government documents and processes, developing software standards and the growing tech community within Nairobi.

Paul continues with mentioning how their approach is to influence policy formulation, intellectual property, data protection, linkages to venture capital and basically catalyzing growth in the ICT sector between government, the public and business.

Rick Joubert of Yonder Media

Rick Joubert, from Yonder Media, “the mobile phone is the most ubiquitous consumer device in the world.” He goes on to talk about how the phone is now even more spread through South Africa than radios. There are 2x as many phones as TV sets. There are 6x more mobile phone subscribers than internet users (in South Africa).

Rick defines the Mobile Web this way:

  • Tier 1: The WAP internet
  • Tier 2: The mobile web application internet
  • Tier 3: Web browsing on phone

**Interruption**
PS Ndemo, who I know and like, is going to give a short address. This isn’t cool, as he’s interrupting Rick Joubert mid-talk (and a very interesting one too). Case-in-point for why government needs to get out of the way more than anything else in the technology field… [Yes, I note that this is probably the American viewpoint on equality coming out].

PS Ndemo is talking through how there were 3.5 million internet users in Kenya last year. Now, with the cost of laptops dropping, we now see 500 laptops sold per day (there were only 20k per year sold before).

Kenya also has the digital villages project (Pasha) with the World Bank is seeing long lines of individuals in far off places coming in to try the internet, get on Skype and figure out how to set up email and other services.

PS Ndemo, ever the gracious person, has at least apologized for the interruption and made amends to the speaker and the conference as a whole. There’s a reason I like him… 🙂

**Back to our scheduled program**

“The Apple iPhone is the number one handset on every continent in the world, except… Africa”. The Nokia 3110 and Samsung E250 are the two biggest phones on the continent. The fact of the matter is, the real money is being made in the inexpensive DVD/Nollywood areas, not in the mobile web yet. Services that play to USSD, Voice and SMS are where the real opportunities lie.

Driving forces:

  • Growth in data networks and coverage
  • Mobile data access charges
  • Local content
  • Better quality handsets shipping at the cheapest possible price
  • Mobile wallets, mobile commerce, mobile banking

Business models and monetization routes:

  • Commerce
  • Transactions and financial institutions
  • Content
  • Advertising

Rick projects that the “size of the prize” in mobile advertising is approximately $8 billion per year in Africa.

Rick finishes showing a video from LynxEffect on how consumers see mobile web, the seductive side of it.

Eric Cantor of AppLab Uganda & Grameen Foundation

I wrote about AppLab and their work with MTN and Google last year. Eric wants to talk about a critical look at a critical space, the 95% of the African population that doesn’t own a smartphone.

(Get the full presentation of Eric Cantor’s slides as a PDF)

“There are more people having conferences and running too many pilots around the use of social mobile work than there is real practical applications and scaling of the products in the market.”

Technology: Be Patient
SMS is not the only way. It’s very challenging and very expensive to work with SMS. One way to adjust this focus is into voice – people like people, and want to talk with each other.

Handsets need to evolve. Nokia 1100 vs Java 1680 ($20 vs $60) – we’re waiting on the $40 smartphone.

Eric reminds us that we need to get back to the Four-Ps of marketing. We can’t forget user experience, the services might be serious, but still need to be fun to use. At the AppLab they don’t believe what they hear (because everyone says “yes, this product will be great in our market”). They try to dig deeper, learned from Google, on what customers really want and see what people are really using.

Question time

I’ve asked the question for Eric Cantor about why we’re not seeing very simple data hooks built into some of the USSD and SMS applications running in Uganda. (more on this here: “Should we be building SMS or internet services for Africa?“). Eric agrees that there is a lot of upside in that space, and that they’re trying to push more towards the data channel, but until we start seeing more data-enabled handsets in ordinary people’s hands out in the villages, it’s just not a main priority yet.

Robert Alai asks what is driving advertising growth in South Africa? Is it the large companies, or smaller organizations?
Rick responds saying that it’s large companies trying to reach their customers, from banks to Coca Cola and everyone in between. Businesses build grow in this space to find solutions for that, and that’s primarily small innovative companies (like his own), small nimble startups.

Agatha Gikonda of Nokia East Africa talks about the Ovi Store and the opportunities for local developers to create applications and put them on the store to make money.

Peter Arina of Safaricom

What are we going to do to drive interent usage in Kenya? Some stats:

Mobile users are estitmated at 19.05m subscribers. Kenya population estimated at 40m with 22m being the addressable market (15yo or older).

70% of mobile data users spend less than 20ksh on a monthly basis. Industry data enabled handsets estimated at 5m or 26% of GSM users. Cost of a 3G handset is 3x higher than that of a non-data enabled handset. Computer prices are way too high compared to the disposable income of majority of Kenyans.

“The cost of devices that access the internet is the biggest barrier to entry for ordinary Kenyans.”

Cost of broadband (price) is prohibitive due to infrastructure investment.

Local content – the most popular sites accessed on the Safaricom network is Facebook and YouTube. Limited content which is highly priced, is also a barrier locally. There’s a need for high quality data enabled handsets to get good experience.

Conclusion
Mobile data users estimated to reach 10m in the next five years subject to availability of affordable devices, increase awareness, local content development and drop in data prices. Safaricom is trying to work directly with the manufacturers to get more data-enabled devices into normal Kenyan’s hands.

There is a need for more local content that is relevant at affordable rates. Need for reduction in frequency costs, a creation of daily usage habits among users and a need for the government to remove VAT on modems.

Questions
@Kahenya is asking a question. Safaricom is trying to become more affordable, it’s still the most expensive network in Kenya. It’s still has no fixed rate for the mobile data network access. It doesn’t work for small and medium sized business, is Safaricom doing anything to change this?

Peter Arina says they are trying to be cautious. They’re trying to focus on quality (bull$%@& as they have the worst network connectivity in Kenya). He says that they have plans to reduce the cost of data as well, but he has no details on it.

The Safaricom rep says that their main goal is to provide services to the Wananchi (the ordinary/mass Kenyan). The question remains then, why is the cost so high for all of their services?

Paul Kukubo asks when Safaricom will open up their network for value added services for developers and other companies. He’s wondering why the revenue share is so high here (currently if you partner with Safaricom, they’ll take about 60% of revenues), meanwhile elsewhere in the world, like Japan, give 70% to the developer.

Paul asks about the issue with the networks taking advantage of the developers who are out there who come to them with ideas and new products.

The Safaricom rep states that this is not the case any longer. They partner with MobilePlanet and Cellulant (as examples, but it’s a poor one because they’re established companies now). He says that at first they start off with a big chunk of the revenues, but as the product does better, then the developer will get more of the share.

Basically, we get no straight answers from Safaricom and only promises of better things in the future with no details.

Jose Henriques, Executive Head: Online Product Management, Vodacom South Africa

6.65% of the African population currently uses PC internet. The top ten countries make up 85% of that.

Some more stats:

  • Africa represents 15% of the world population, but only 3.9″% of the world’s PC internet usage.
  • Africa’s PC Internet users have increased by 1359% from 2000 to 2009.
  • The global service revenue generated from subscriptions to mobile internet access are forecasted by Informa Telecoms & Media to rise from $57 billion in 2008 to $120 billion in 2013.
  • Mobile ad revenue is estimated to be at $2 billion by 2014. Total value of marketing spend on mobile to be around $6 billion.
  • Mobile subscription rose from 54 million to almost 350 million between 2003 and 2008.
  • On average there are 60% mobile penetration in the world. In developing countries the figure stands at 48% , which is 8x bigger than in 2000.
  • Lack of fixed-line access will drive huge mobile internet usage and revenues.
  • Vodacom generates 49 million ad impressions per month in South Africa (big opportunity).

(Full presentation by Jose Henriques from Vodacom South Africa)

Questions
What has been defined as a smartphone, is not what we define one as today. How would you define it?
Cheapest data enabled devices are about 2000Ksh in Kenya. Safaricom thinks that these are smartphones.

Mpesa… Why is Safaricom unable to cooperate with and provide third-party access (opening their APIs) to developers in Kenya for Mpesa?

The Safaricom rep says that they are willing to do this, and that they’re hungry for people to come in with ideas and products. No specifics given on this. @TMSruge, the moderator, asks her to provide details on how they are actively trying to seek out and help grow this as there is no API or SDK.

@wanjiku says she’s heard Safaricom saying that they have a tendency to do well with big companies, but holding smaller company money for 3-4 months, hurting their cash flow.

Steve Vosloo asks what types of local content are people really willing to pay for?
The Safaricom rep is out of touch… she states that, “no one is willing to pay anything for mobile content”. This is bunk.

Rick Joubert comes in to state facts on how much money there is being made in South Africa in mobile content, $540 million is the real number just in SA. It’s not whether people will pay or not, it’s whether they find value in local content.

A question was asked of Safaricom, why they don’t open up the ability for third-party service providers to bill consumers? The answer by Safaricom is that they are. (I can’t confirm this)

We have Zap, Mobile Pay, Mpesa, etc… when are we going to have an agnostic system to send/receive money? by @kahenya

MTN rep says to come to Uganda to see this working. It’s there working on the MTN system. It’s a serious issue of not having your payment system to go beyond your own network.

Mpesa is a wall gardened. Kahenya and Teddy Ruge ask when there will be a need to NOT walk around with 3 handsets to send money within each one.

Safaricom states that they can already do this within their system. They lay the blame at the regulators feet for why it hasn’t happened.

**Lunch**

Brett StClair of AdMob

Brett starts by asking, “what is mobile internet?” It’s a website that is built for mobile handsets. Admob puts banner advertisement on these sites. They server 12-14 billion advertisements into this network each month. The man on the street can earn revenues start advertising today. There’s a 60% payout to publishers.

Have access to 53 countries in Africa. Monthly ads serves is 750 million in Africa alone.

African Mobile Web currently has South Africa, Nigeria, Libya, Egypt and Kenya as the top 5. Data prices do have a huge effect on the advertising revenues available in Africa.

Nokia 3110c is the most pervasive phone in the market (3.8%), Samsung E250 is at 3.7% penetration. Top smartphones are the Nokia N70 at 10.8% and then Nokia 6300 at 10.3% and then the iPhone at 8.2%.

Top reasons why South Africa is working:

  • 5 million fixed line internet vs 10 million mobile internet users
  • Strong operator billing infrastructure
  • However, mobile money is not mature yet
  • Early adoption by premium traditional publishers
  • consumers traditionally have had a fast adoption rate
  • Due to vast competition for impressions average CPC pricing grew from $0.03 to $0.27 in a year.

Is Africa next? The rest of the world thinks it is, but we need to get the local people to understand this.

Cheapest inventory in the world is in Africa… global accesss average is $0.03, in Africa it’s at $0.01. Local contet providers will benefit as they understand the local African consumers.

Key to making this work:

  1. 3g network coverage
  2. Cheap data pricing
  3. GPRS enabled handset penetration

What are the opportunities in Africa?
Strong tend to follow the West and South Africa. Paid for content, reliant on operator billing. Free content, which is ad funded. The top publisher types are communities, portals and downloads. The top categories are music, religion (15%), games and brands.

African traffic is made of 54% Nokia handsets, then 18% Samsung handsets. iPhone requests make up 18 million impressions in Africa.

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