Observed market forces acting on the changing mobile landscape in East Africa

By | June 18, 2011

About two years ago I remember making an observation that I couldn’t seem to see any coherent patterns anymore the way I’d been able to by surfing the net for information. Flux I called it. Everything felt like it was in transition and nothing seemed to stay steady enough to grasp, much less describe. This was particularly apparent in the broad space around mobile phones, the BoP, emerging markets, Africa, and all the things that emerging futures used to write about so passionately. When the patterns stopped is when I think the writing petered away.

Reflecting on this now, particularly right after the intense experience of the Pivot25 conference in Nairobi, I wonder how much of that sense of ‘things are moving too fast to make any sense of so lets step back and away from it for a while’ was but one manifestation of the extremely wide ranging and rapid changes taking place here in Africa. Just over three years ago, when I first went into the field looking at mobile phones among the mass majority of Sub Saharan Africa, the landscape was reasonably clear. Certainly value added services were teh future but what form they would take was still unknown. Voice and text were expensive relative to average cash flow and the majority of mobile phone users were on prepaid or pay as you plans. The great majority, over 90% across the continent – the prepaid plans being the model that facilitated the uptake of subscriber growth at the rates that were already visible as significant in late 2007. The internet was an expensive luxury no matter how you accessed it and available airtime was hoarded like wealth.

Today, if asked, I would say that the landscape is still in flux and still evolving but now we are able to see some of the market forces acting on this rapidly changing environment. Here are some of them, with a particular focus on East Africa, led by Kenya:

  • Undersea cables connecting Africa to the global information network leading to lower cost of bandwidth and data
  • Spread of mobile money transfer and payment systems by operators across the continent
  • There’s been a disappearance of shops buying and selling used phones, you also don’t see as many signs offering phone repair. This needs to be explored further
  • Sub $100 Android smartphones launched in Kenya and Uganda, with other locations to follow
  • Significantly lower costs of voice and SMS
  • MPesa’s ubiquitiousness is now leading to the next level of innovation building on the layer of financial transactions
  • Mobile web uptake increasing daily with phone often only or default device for browsing

There’s more I’m sure but these seem to be the most visible influences, at this point of time and as far as I am able to tell without a focused study. Just yesterday I said that these are dynamic factors so its no more a case of so “what does it all mean?” when you connect these dots, it is more of a situation where we take these environmental conditions and attempt to explore a few scenarios of future evolution and paths of “what might it mean” – both from the point of view of the mobile phone industry as well as otherwise.

Does this environmental shift imply changes for consumer products? Retail? Pricing and business models? I think so but what it is and how it will influence change is yet to be determined.

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