[kictanet] Marching to a different drum – Africa enters the age of mobile content

[alice]

  Marching to a different drum – Africa enters the age of mobile content

News Update concentrates all its coverage on what happens in Africa. But 
this week we have to describe events elsewhere because as all too often 
happens, key decisions that will affect the continent are happening 
elsewhere. Unless something fairly radical happens in the next 12-18 
months, the development of mobile content revenues on the continent will 
be shaped by the “hand-me-down” attitudes and technologies of others. 
Russell Southwood seeks to explain.

Last week saw two more salvoes fired in the war for mobile operating 
systems. American advertising and search engine company Google launched 
its Android operating system in partnership with the Open Handset 
Alliance and 30 mobile phone makers and interested parties like 
Qualcomm. But amongst the larger makers, it is working closely with no 2 
player Samsung with whom it agreed a deal on mobile tools in January 
2007. Google described Android as “all of the software to run a mobile 
phone, but without the proprietary obstacles that have hindered mobile 
innovation.”

Meanwhile the world’s largest mobile handset manufacturer (Nokia) agreed 
with the world’s largest mobile phone operator (Vodafone) to launch an 
integrated suite of Vodafone services combined with Nokia Ovi services 
on a range of Nokia handsets. A number of these handsets will be 
exclusive to Vodafone. By all accounts, it improves access to the Nokia 
Music Store, although Vodafone has its own product, Omnifone 
MusicStation. Vodafone looks set to take over Vodacom in the 
not-too-distant future.

Meanwhile Symbian, which is already on 165 million handsets worldwide, 
was dismissive of the Google offering. John Forsyth, Symbian said:”… a 
mobile OS is a very specialised form of rocket science. It's not search 
rocket science." However this has not prevented one-time computer 
company Apple from showing it can deliver this kind of rocket science, 
so why not Google? Whoever gains dominance in this market and whether 
the approach is open or closed will affect how mobile content develops 
in Africa.

And it is at this point two key issues coincide for those in Africa who 
want to develop mobile content revenues. Everyone knows that the mobile 
phone and not the computer is the continent’s device of choice but this 
rather masks the considerable variation in phone operating systems, web 
access availability and just plain old functionality. The average phone 
on the street is at the bottom end of the range and is really only fit 
for receiving SMS messages.

This brings us to the hoop-la surrounding the launch of the iPhone today 
in the UK as I write. Leave aside the usual promotional hype and the 
sight of members of Cult Apple waiting overnight to buy their treasured 
object, this phone is different. From trying it on a recent US visit, it 
has an easy-to-use functionality that with adaptation has much to 
commend it in the African context. It’s intuitive and icon driven, 
allowing a lower level of functional literacy for users. (However, the 
iPhone will not be going to South Africa any time soon. See Telecoms 
News – In Brief)

The barrier to this kind of device is cost and the discussion mirrors 
similar ones held about palm computers for Africa. The iPhone launch 
price in the UK is US$538 as it is being launched as a premium product 
with a monthly plan costing US$70. But give it 2-3 years and it will be 
down to $300 and be a mainstream product, not necessarily produced by 
Apple. But secondhand prices in Africa may take it down closer to $100-150.

But even this lowered price will not breach the magic $100 level that 
Nicolas Negroponte set himself and failed to reach for a low-cost 
computer. Also the low price phones produced as part of the GSM 
Association initiative are stripped back in terms of overall 
functionality. But if Africa is to have access to web content on its 
mobiles, then it needs a cheaper phone device that can access web 
content with a screen that is bigger than two large postage stamps.

Also whilst Africa’s mobile companies engage in the data upgrade arms 
race, little thought seems to have been given to battery life issues. 
The iPhone may not have 3G but it has an 8 hour battery life compared to 
the 3G compatible Nokia N95 which has only a 4 hour battery life. No-one 
seems yet to have thought through the energy implications of even a 
significant minority of Africans using 3G phones.

Now I can hear you saying that all of this is fantasy stuff for Africa. 
But Vodacom in South Africa said in October 2007 that it had 139,000 
HSDPA customers and 899,000 Vodafone Live! subscribers, the latter being 
the content service it markets from what is likely to become its parent 
company. It is also pioneering a mobile TV service to its 3G subscribers 
in South Africa. Numbers are modest but growing. Ah yes, but South 
Africa is different. Nevertheless jobs service in Kenya attracted 35,000 
subscribers and other services elsewhere in Africa are attracting tens 
of thousands of people.

With numbers on this scale, mobile phones are not just communications 
devices but media. Certain types of advertisers will be very interested 
in getting to the largely young demographic that uses these services. 
The sums will not be spectacular but they will help to fuel further growth.

But the barriers to growth in mobile content revenues are significant. 
Last year we sat in on a seminar with mobile phone companies drawn from 
right across Africa. Every single person stressed how important content 
development was to their company and how they had a member of staff 
working on it. However, with few exceptions not one of them talked about 
a successful mobile content service that they were actually operating. 
Mobile companies were not set up to do content and the revenues are not 
yet large enough to gain real traction with operational managers.

A number of mobile operators are owned by multinational owners who have 
sought to introduce content bundles that have been developed in Europe 
and the USA. But as one of the more honest managers for these companies 
admitted, there is only really on the most optimistic view a 50-60% fit 
with the African market. So there is a need for better and more 
compelling local mobile content.

But this is where the complications start. The typical income split is 
50% to the mobile operator, 10-20% to the mobile platform provider and 
30-40% to the content provider. Anxious to drive up income from this 
source, the mobile operators are seeking to take a bigger share of the 
value in other countries. However, they need to be careful not to kill 
the goose that might lay the golden egg. They could easily give more 
generous deals as they benefit from the minutes these services add. 
Ideally there needs to be a new service every 4 weeks in some African 
country so that it’s possible to work out what works locally and the 
optimum price.

Another difficulty is that mobile providers are insisting on exclusive 
deals. For example, if you want to launch your mobile content service 
with a particular mobile operator, you have to offer an exclusive deal 
for one year or more. The mobile operators still see content as a 
marketing device rather than revenue in its own right.

The walled garden approach is very like the early days of the Internet 
where people like AOL tried to create their own content universe. 
Understandably, the mobile operators would like to control the 
development of content on their media and take a large part of the 
rewards. Apple’s approach to iTunes illustrates how lucrative this 
approach can be.

The difficulty is that for mobile content to thrive in Africa, it has to 
be easier to get it to market and to as wider range of people as 
possible. At the moment, mobile content creators may have to re-version 
their services for as many as 3-5 different delivery platforms.

The discussion parallels those that were had in the early days in Africa 
about interconnection between mobile operators. Many operators said they 
would not connect to other operators because it would be easier to 
retain subscribers and revenues if the stayed isolated. In the event, 
interconnection meant almost all operators benefited from there being a 
large and growing “critical mass” of users. The same would almost 
certainly be true for mobile content and perhaps the time is ripe for 
operators to talk to each other about how best to promote wider use of 
content, rather than simply tending their own back gardens. African 
Mobile Content Alliance anyone?


 From Balancing Act

	

	


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