Business model innovation, with caveat

By | December 26, 2011

About 3 or so years ago, there was much fanfare about the impending launch of Airtime Airlines, a South African venture that planned to offer a whole new way to purchase flights. One could use airtime minutes and buy tickets immediately or save up towards its purchase over a period of 6 months by sending small increments of airtime as and when available. This was certainly an exciting development in a region of the world which has taken the lead in pay as you go business models – from prepaid rural electricity to the ubiquitious cellphone – but it never took off and crashed before its first flight.

Today I came across an even more exciting concept – the merger of a basic solar power kit to provide lighting and the prepaid mobile phone. Econet Wireless, the Mauritian telco has launched the Solar Home Power Station through its energy subsidiary Econet Solar.

The product contains a SIM card – the same as those used in cell phone handsets – which enables the device to communicate with the cellular network and in turn makes it possible for the customer to pre-paid for energy usage, in the same way that they currently pay for airtime on their cell phone.

Upfront costs are indeed a barrier for many who manage on irregular income streams from a variety of sources and the prepaid or pay as you go business model has successfully demonstrated its relevance and value to this great majority of the world’s population.

The only other downside as far as I can tell at this moment with the little information available is whether the customer will end up owning the product after some period of time or will it always be leased to them and activated only through perpetual payments?

Secondly, unlike a phone which still permits incoming calls when there is no cash for a top up, what use will this kit be if the family goes through a tough time where little cash may be available?

There are pros and cons to this model but imho it is only when such models are launched and tried over time that we will be able to evaluate which nuances need tweaking in order for such to work, unlike the airlines which never took off. The press release states the product will be trialed and then released commercially in early 2012.  One hopes that it will indeed be so…

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