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?