South Africa, where 80% of the adult population own a cellphone but the median income is a mere R3\u2009000 a month, poses specific challenges to tech companies trying to make inroads into the cellphone market.<\/p>\n
For many, the solution has come in the form of apps that allow users to chat at rates cheaper than those offered by local service providers.<\/p>\n
Although cellphone-based instant messaging services such as MXit<\/a> previously dominated the South African scene, they have made way for more sophisticated communication platforms with selected contacts.<\/p>\n One such newcomer is WeChat<\/a>, which is currently being punted hard on the local market: if you don’t have the app, you may recognise the name from billboards and TV adverts.<\/p>\n It’s a free “over the top” (OTT) application that was introduced in 2012. It allows users to send written text messages, videos and photos using internet connectivity at a fraction of the price charged by regular SMS.<\/p>\n It has a captive market in China and is growing exponentially in countries such as the Philippines and Malaysia.<\/p>\n It claims to be the world’s fastest-growing social app and has more than 100-million registered accounts.<\/p>\n A recent survey by GlobalWebIndex estimated that its audience grew by a record 379% between the second and fourth quarters last year.<\/p>\n WeChat is owned by Chinese Tencent<\/a>, which in turn is 34% owned by Koos Bekker<\/a>‘s local media dynasty Naspers<\/a>. So its interest in the South African market makes sense.<\/p>\n But the Chinese app is entering a market already dominated by some stiff American competition: WhatsApp<\/a>. It’s believed that more than half of all adult South Africans living in towns and cities have downloaded WhatsApp, the world’s most popular OTT app, but it recorded a revenue of only $20-million last year and has a mere 55 employees.<\/p>\n Facebook<\/a>, which recently took over the company, essentially paid R460 for every one of WhatsApp’s 450-million users to make up the hefty R207.74-billion bill.<\/p>\n But WhatsApp’s founder, Jan Koum, has insisted on a very particular revenue model, and that strictly excludes making cash through advertising.<\/p>\n WhatsApp has made all its revenue from subscription fees. People use the app for the first year free of charge; thereafter, they are (in theory) billed $0.99 annually, although thousands of users say they have used it for several years and never paid a cent.<\/p>\n But Koum is optimistic it will be worth its weight in subscription fees alone, with one million new users signing up every month.<\/p>\n On the other side of the coin, WeChat hopes to carve out its marketshare in price-sensitive South Africa by keeping its app free.<\/p>\n It makes its money through add-ons and innovative sales structures. According to the Economist, about 85% of the money Tencent will make from the app this year will come from selling games. It also sells stickers, gaming avatars and add-on services.<\/p>\n In its home market, even some vending machines now sport a WeChat-compatible barcode for each item. Users can scan and pay for a packet of chips simply by opening WeChat, or Weixin, as it is known in China.<\/p>\n But the question is how well these functions will translate into the South African environment, and what the appetite of the cash-strapped South African consumer will be for the add-ons?<\/p>\n “Currently we do not share individual territory numbers, but we are pleased with the progress we have made [in South Africa],” said Brett Loubser<\/a>, managing director of WeChat Africa.<\/p>\n Many of the standard functions found on the app overseas are available locally.<\/p>\n Its “brand-owned” channels, known as “official accounts” are also available on South African soil, he said.<\/p>\n “In 2014, we are working hard to deliver platform services in South Africa to further strengthen our differentiated position,” he said.<\/p>\n “Our first successful step in this regard has been delivering a highly active second screen experience for Big Brother Mzansi together with DStv. We built a message to screen, voting and polling environment for the show in a matter of weeks.”<\/p>\n Whether innovations like these will help to conquer the already entrenched subscription-based model remains to be seen.<\/p>\n But the “over the top” battle is likely to yield cheaper prices and more inventive offerings for the Mzansi consumer.<\/p>\n Source: Mail & Guardian<\/a><\/p>\n Time for telecoms CEOs to worry: Michael Jordaan<\/strong><\/a><\/p>\n WhatsApp to add voice calls<\/strong><\/a><\/p>\n Facebook to buy Whatsapp for R209 billion<\/strong><\/a><\/p>\nWorld’s fastest-growing social app<\/h3>\n
Revenue from subscription fees<\/h3>\n
Sharing numbers<\/h3>\n
More on Facebook-WhatsApp deal<\/h3>\n