Archive for the ‘Cyber cafe series’ Category

Reflecting on the mobile internet in Kenya

Poster in shop, Kagumo, Kenya 18th October 2011

After the past three weeks of focusing on cyber cafes and internet access in urban and rural Kenya, we’ve been questioning the value of the “mobile internet” statistics provided by operators to the CCK. Muchiri pointed out that since most of our feedback seemed to revolve more around SIM operated routers installed by cybers, or mobile broadband modems sold either to regular home and business users or even, in the smaller towns, used to link networked computers in small cybers to the internet, what did the information actually communicate?

A thousand shillings cheaper than in Nairobi, seen in Kagumo, Kenya

At the shop we were in, Jacqueline (who is saving for her own laptop for Christmas) explained to us that it was cheaper to buy a data bundle or use the modem, than to browse on the phone using the Ksh 2/min offer directly.  Extremely knowledgeable about the most cost effective ways to browse using whichever device you may have, she uses her phone for social networking constantly and prefers it to the cyber which she only visits occasionally. However it was she who pointed out to us that she didn’t think that it was internet enabled phones alone that were affecting the cyber’s business but also the fact that affordable devices (desktops, laptops and modems) were increasingly popular and easily available.

If so, then the 98% of Kenya’s internet users who are on mobile internet may not be doing it through mobile phones alone as is so often assumed but via a variety of SIM based devices. A detailed breakdown of devices under the heading of ‘mobile internet using SIM’ as reported to the authorities might begin to offer a clearer perspective on user behaviour and modes of access.

Postcard from Kajiado: Cheap chinese phones and the internet

Downtown Kajiado, Kenya, 21 Oct 2011

It wasn’t the first time we’d heard this from a cyber cafe operator, but apparently the biggest challenge to mobile phone users wishing to get online by using their spanking new phones was whether they were a cheap Chinese phone or a fake.  Up and down Kenya, or right in the heart of Masai country which is where we were today in the hot sunshine, if a customer bought a cheap phone and wanted to get online they ended up coming to the nearest cyber cafe for help setting it up. The problems are legion – from the fact that only genuine brands like a Nokia or Samsung are easily and directly set up with the mobile operator’s internet connectivity by receiving an SMS to the fact that the OS was rarely well configured or programmed.  One lady we’d met earlier this week  confessed shamefacedly to using a fake Nokia for browsing – she worked for a Safaricom dealer – apparently she was saving every penny towards buying a laptop for Christmas.

It makes me think that as social networking drives many more online to connect and communicate with their extended networks, global brands have less to worry about than they imagine they do.

Impact of mainstreaming and commodification of cyber cafe services

Central Business District, Nairobi, 6th October 2011

Around 2007, the urban cyber cafe industry began to display signs of maturing as the market saturated and the services specific to internet access underwent a process of commodification.  As it came to be perceived as no different a business than setting up a corner kiosk or hot dog stand, there was a shift in the profile of owner/operators. Many employed professionals such as doctors, teachers, accountants et al purchased going concerns as a means to increase their income streams, considering it no different from owning any other type of  shop which could be manned and run by employees during the day.  While computer literate, few in this new segment of owners were the computer savvy technical specialists or hobbyists who’d originally set up internet operations as a business nor were their employees for the most part.

Given this context, Mathew, who runs a thriving cyber cafe business spread over three towns a couple of hours north of Nairobi, articulated three reasons why many cybers were seen to have shuttered their business:

1. Gaining a reputation for unreliability – Inexperience and/or lack of knowledge on basics like virus management, maintenance or even not knowing how to make all the equipment work meant that systems were often down or not working properly quickly leading to customers avoiding the shop.

2. Quality and training of staff – There would be a difference in operations if the owner were to check in with the business and dealt with issues as they arose rather than showing up once a week for example. Finding qualified people to manage the cafe in the meantime, ensuring that at least one person with the requisite technical knowledge was at hand or on call was imperative to ensure the smooth running of the operations and gaining customer confidence regarding the quality of services offered.

3. Customer relationship management – Thus, building relationships with customers, ensuring loyalty and repeat returns over the long term was of importance to sustain the business.  Mathew himself had a sophisticated customer loyalty program in use across his three cafes – a smart card which could be purchased for differing amounts in advance and printed with the customer’s photograph. He had set up a system by which his staff could monitor and track minutes used by this user base across the three different locations. It ensured loyalty as well as provided an upfront cash payment that is one of the benefits of a prepaid business model.

Perhaps this was why the decline was being seen so obviously in urban locations accustomed to having a cyber at every corner. In Mombasa, one of our interviewees mentioned that it felt like there was one in every building.  The urban industry had matured to the point that a cyber was as ubiquitous as an MPesa dealer or Coca Cola kiosk with the subsequent assumption by many that it could be run as easily as any other business. This aspect does not diminish the impact of other market forces such as internet enable mobiles and affordable data plans and modems but does help explain why we kept hearing that business was growing whenever we stepped out of the city.

As technology diffuses outward from the urban metros, the cybers are seen in ever smaller market towns and highway crossroads, that is, the industry is still in its growth phase, though certainly not in its infancy. A short conversation with a small town mobile shop assistant informed us that they were selling an average of 5 broadband modems a month and she herself found it cheaper and more convenient to browse via her phone. Another young man employed by a national operator observed that education was a critical factor as well – not in terms of the basics, as the region he supported had a very high literacy rate, but in terms of locales where more young people were going off to college and university, being exposed to the potential of this new technology then bringing it back home for it to spread further.

What this seems to imply is that its the casual or social browser – the chatting on IM, the Facebooking, the occasional email – who seems to have cut down on their cyber visits, and this is often the largest segment of people going online. The hard core enthusiasts, the business users or anyone who has not yet invested in their own set up but prefers the “comp” to quote one young man, aren’t abandoning their trips.

What is happening however to the industry as a whole is a natural evolution. In the city, its the innovators who are thriving even as the basic shops decline – a case of may the fittest survive. None among the knowledgeable IT savvy owner operators ever even considered the mobile as a threat to their business, perceived or otherwise. The only constant response to the subject was that of the pricing plans mentioned earlier.

While the answer to the question of whether its mobiles that are pushing the cyber cafes out of business seems to increasingly be a No, our exploration of market forces acting on the industry is still throwing up factors that we had not taken into consideration when we began.

Innovation at the small enterprise level

Moses with Muchiri, MtoPanga, Mombasa Oct 10th 2011

I’ve never been left with such a strong sense of enterprise and innovative thinking as I have now after this past week in Coastal Kenya. In fact I asked Muchiri if he’d been specifying some high standards for the introductions made to various cyber cafe owners or was it that we just happened upon the amazing crowd of people that we did.

What blew me away was simply their quality and resourcefulness – Moses for example, shown above talking to Muchiri in his little workspace at the back of his second cyber cafe, was a biochemist by training with a penchant for fine arts. He had a thriving business around creative services – graphic design, screen printing, photo touch ups etc right down printing your choice of photograph onto a ceramic mug for you. This was in addition to his two cyber cafes and computer training classes. He was the first to dismiss mobile phones as the perceived threat to cybers, instead pointing out that it was mobile broadband modems that were having the real impact along with easily available cheap desktops.

The common thread running through the success stories of growing sustainable small businesses seemed to be centered around a willingness to question the limitations of conventional services, spotting opportunities centered around this investment in hardware, software and access and a sense of changing trends observed among their customer base.

Moses' Dibarts ICT Village at Vintage Plaza, Mtopanga, Mombasa

Moses actually mentioned that latter – almost articulating the basic idea of doing user research and incorporating the feedback into his business strategy. He calls it the number of ‘No’s he gets versus the number of ‘Yes’s as one of the drivers for his choice of services to offer.

The ones who felt the slowing down of business were more likely to be those who imagined that simply setting up shop would bring in the cash flow or had let the changes go by passively without responding.  The good old days of customers waiting in a queue for a limited amount of time at the computer have gone for good.  What’s emerging in the frontlines are solutions like Robert‘s in Cannon Towers in downtown Mombasa.

Business centre set up by Robert, Mombasa, Kenya 12 Oct 2011

Noticing that many of his cyber cafe customers were walking in piles of documents they were struggling to manage in the tiny space available in the traditional cyber cafe layout, Robert realized that there was a business opportunity in catering to their needs. The majority of his business came from shipping agents and such like, most of whom would not even be based in Mombasa but in town only long enough to release their goods at the nearby port. He threw out the cramped cubicles and replaced them with spacious work stations – in effect, offering hot desks rentable by the day, week or month by the transient business workers.

Robert's signage on the street level of Cannon Towers, Mombasa, Kenya

Now, with fewer computers he generates more revenue at his business center than he does at his original cyber cafe still operating at a different, yet more high traffic location surrounded by educational institutions. Naturally, he already has his expansion plans in place even as the traditional cyber next door has declining revenues due to market forces.

Pondering the sustainability of the cyber cafe industry and its future

Business is booming, Kilifi, Kenya 11th October 2011

Jomo, who runs a traditional cyber cafe in an office building near Mombasa’s busy port district, gave us a well framed and articulate argument on the challenge of running a sustainable business given the costs involved.  His key point was that the internet providers, particularly the mobile operators now actively competing with conventional ISPs, were pricing their products to suit the end users rather than the ‘channel distributors’ of the service i.e. cyber cafes. They leave little or no margins for cyber cafes and his own business had shown a 25% decline in the past three years with no end in sight for the steady downward trend.

On one hand, low cost access to voice and data has been an undeniable boon to the majority of Kenyans who can now call a friend or relative in the US or India for just 3 Ksh (USD 3 cents) a minute from their regular prepaid account.  Mobile broadband modems average 3000 Ksh and are a simple addition to small offices able to pick up refurbished desk top PCs for as little as USD 100.  In Mombasa city and its environs, this affordable combination has made the biggest impact on the neighbourhood internet cafe – be it in a lower income residential/market area or in the Central Business District.

But on the other, as we drove outwards from the city into the smaller towns and markets, where the cyber business is still booming if not showing a growth trend in some places, listening to the stories around the challenge and cost of maintaining sufficient internet access for more than one single personal computer, I wondered if this pricing trend is necessarily a good thing in the grand scheme of things.

I’m not talking about increasing the cost of access to data but whether there shouldn’t be a seperate pricing plan for the cyber cafe industry as opposed to offering them the same data bundles and packages as any other SOHO customer.  And why?

Right now there’s growth as increasing numbers of people go online at work or at home, with mobile phones or employer provided laptops and the future looks rosy for the industry as well as those who watch internet penetration in developing nations. But there will come a point after which there will be people for whom personal ownership or such employment will not be possible, nor make sense. For example, there are beach boys in Malindi who have been gifted with laptops by their tourist friends but continue coming to the cyber for their internet needs. Which beach shack is set up to support computer usage and does that investment in a mobile broadband modem actually make sense when so much assistance and support is required to navigate one’s way through the complexity that is the modern day OS and its software?

Once we sweep aside the veil of hordes of students going on Facebook with their phones, we see the need for egovernment services such as the KRA or even the convenience of booking bus tickets online. The cyber cafe’s role in enabling and supporting the accessibility to the world wide web, especially among the less educated or well off, is critical if these services are to reach everyone for whom they meant.  If the cost and pricing of the services and devices are increasing customer usage and growth in the now, they imply a death knell for cyber cafes struggling to make ends meet.

Yet the cyber is a much needed element of the value chain – they are the informal support system for all this technology. Nearly all mentioned that daily customers would come in seeking assistance in setting up the internet on their mobile phones. Or needing help in setting up their Facebook accounts. This mobile revolution we talk about isn’t happening by itself, but it might end up killing the midwife.

You’ll find me on Facebook

Peterson on Kilifi's beachfront, Kenya Oct 11th, 2011

Peterson (in yellow) has just begun setting up the beachfront corner he and his colleagues maintain during the high season at Kilifi, next door to the Baobab beach resort. A few curio shacks, some local art, a massage and salon comprise their services to the expected influx of tourists taking a break from the winter weather elsewhere on the planet.  Yes, he’s on Facebook offering his ‘beachfront services’ he tells Muchiri, using both his phone and the occasional visit to a cyber to stay updated. Another gentleman, the artisan in the white shirt goes as far as to use his brother’s laptop when he can or the occasional cyber visit.

Carving ebony, Kilifi, Kenya 11 Oct 2011

Standard rates across the country for the majority of cybers (we’ve seen some outliers) are 1 shilling a minute for browsing and 10 shillings for a printout. I’m not wholly sure I could even begin to categorize or generalize “who are the typical cyber cafe customers” yet nor can one say “Oh its the youth who are on Facebook”. Surprises are popping up everywhere. Lets see how it goes on, we’ve only just begun.

Inserting tones into your iPod

Wall art signage, Old Town Mombasa, Oct 10th 2011

Inserting tones i.e. Ipod – just the choice of words used to describe the service offered, that of downloading from iTunes seems to imply the order and popularity of the technologies introduced in this market i.e. contextual knowledge of the customer base. I’m not articulating this as well as I’d like but we’re going back tomorrow to take a closer look at this neighbourhood and what we’ve been seeing there.

VoIP centers in Old Mombasa

Old Town, Mombasa, October 10th 2011

We saw this shopfront while following our friend Ahmed through the narrow gallis of Old Town. Wouldn’t you think it might be a cybercafe offering you a chance to go online? We did so too, but no, its a small room with a table top full of boxes and switches. He offers only VoIP based international calls to certain destinations popular in the neighbourhood and has connected to two different services in order to offer the best rates for these countries. Once we recognized what we were looking at we realized that most of the shopfronts we’d assumed were internet cafes were in fact only VoIP call centers.

Connecting people, Old Town Mombasa Oct 10, 2011

His neighbour "Game World" - only VoIP now

Socially networked mystery shopfront

Just before Mtwapa, Kenya Oct 11 2011

We spotted this closed shopfront just before entering Mtwapa – a midsize town about 10km from Mombasa, when returning from a day trip north to Kilifi today. There was no signage to tell us whether it was a cyber cafe or internet center of some sort. But we’re sure they are extremely networked socially.