Mobile-Centric Business Not Ready For Primetime
Every enthusiast needs a skeptic around to keep them balanced. The power of positive thinking is immense—but so is its capacity for error, unless you take the time to answer the skeptics before committing yourself.
That said… I'll get to my point. The 'Cell Phones Are The Future' statement is very heavily clichéd at this point. It is said that the mobile phone is the one pervasive device that has penetrated some of the poorest economies due to the overwhelming demand for any form of telecommunications. Sure, but If you're an entrepreneur thinking of leveraging this mobile platform, consider the following:
- The mobile phone companies have invested billions in notoriously difficult economies in Africa and are currently raking in sweet profits. Trust me, they're not about to share the loot with just anyone after pouring blood and sweat into the current infrastructure. The barriers to entry are extremely high at this point… and I'm almost tempted to say that the current companies have ganged up in a cartel-like structure to protect themselves.
- Africa is the wild west. Interoperability issues are sure to be a big problem especially where m-commerce is concerned. Interoperability aside, I can't even begin to fathom the imminent fraud quandary.
- Seriously - all cell phones are good for at this point is calling and sending text messages. Outside the cell phone companies, the only other people cashing in are selling ringtones and graphics. Beyond that we have very few early adopters willing to try anything else.
Many of the new startups are spending ridiculous amounts of money on impractical schemes. Is anyone even studying the habits of the end user to determine if all this is necessary? Someone will make plenty of $$$$ down the road, but until then there will be plenty of burnouts on the side of the road.
I'm sorry for the pessimistic view, but that's just my 2 cents.
Pessimistic or not, it also reminds me of the time UMTS (~ CDMA) services were introduced in Europe for the networks and companies started looking for the so-called killer applications - something they are still doing.
Videoconferencing, for instance? Who needs that? Deaf ppl, who communicate virtualy. But that’s about it.
Me thinks a “killer app” for the EA market could be something that runs on the least common denominator - the already mentioned SMS services that would run on Arthur’s blingbling phone as well as cucu’s Motorola C113 over in Nyeri.
At least one blogger agrees with you about:
“…the smartest people I know falling for the mobile trap. I’ve observed dozens of entrepreneurs go into mobile wireless. All have failed.”
That’s an explosive post…
Actually, I think you’re right when you talk about applications made for the phones that are only available on the top-end ones. There are real applications and uses for the text messaging and voice that you mentioned.
Mxit.com in South Africa is doing a phenomenal job and growing with leaps and bounds because they are leveraging simple technology that makes it financially worthwhile to use their system. It’s downloadable, but it’s also obviously working.
I like systems that can work straight from an SMS layer the best though. Take what they’re doing at DrumNet.com, that’s something very useful and can scale quite nicely with what people use every day.
Okay, so what CAN entrepreneurs do to break into this arena that has such blood sucking stakeholders? Provide services, something new that is not easy for a large (slow) company to replicate.
Let’s take the US online video market as an example. YouTube created this video service and became more popular than Google Video. Google was forced to buy them or become irrelevant in that area. The same lesson applies for mobile phone apps/platforms in Africa. Get the people behind YOUR brand and enjoy getting scooped up by a “big player”.
Interesting post, after staying in Kenya for almost 3 years I gotta agree with your item 1. I remember trying to get access to SAFCOM or CELTEL API’s and it was a complete nightmare.
Its amazing how a company can structure itself in such a way that other people cannot build onto its applications or it simply make it difficult to build onto their infrastructure. That said also please not their senior application developers come from out of town to fix things or improve on things and then bounce - meaning no local expertise and or no local input really (lack of reality applications)
For instance Kenyans text more than they place calls, however none of the networks has ever taken a leap of faith to increase call traffic like in Tanzania where TIGO offers free calls between 11pm to 6am. From a marketing perspective it makes perfect sense that I will own a TIGO phone just in case I need to make that call at 11.57pm, and at 2pm well I still have my TIGO phone I might as well use it to make another phone calls since I already use this cellphone.
Anyway I digress, - good post though -