Tapping the potentials of Nigeria's mobile app market

The advent of the Global System for Mobile (GSM) in Nigeria more than a decade ago has brought with it immense opportunities for entrepreneurs and innovative minds. Perhaps, one of the most untapped gold mines in the telecommunications sector is the applications development space. Phone makers, telecoms firms are increasingly looking to forge strategic alliances with mobile apps developers to further expand the scope of the market, writes BEN UZOR JR

Global perspectives

Undoubtedly, the last decade has witnessed a remarkable transition in the global mobile phone market. The extensive proliferation of devices and mobile applications has turned the heads of every successful business player in the world, in its direction. Interestingly, the robust growth prospects in both iPhone and Android application domain has been drawing new players and inciting independent application developers to step-up the quality-levels of their solutions. But more importantly, this decade will indeed be best remembered as the dawn of a new era in the field of mobile phones and applications development. Those culpable, Apple and Google, the two dominant players of this ecosystem, must be given credit for this metamorphosis that has seen the sub-sector become a massive revenue generator.

Some industry watchers strongly believe that it wasn’t until the launch of Apple Appstore that the mobile applications industry started to blossom in earnest. First, it fundamentally changed the revenue model in favor of the developers which has become the current de-facto standard (70/30) in the mobile apps business. Secondly, it brought more developers into the ecosystem. It also fostered the before now erroneous idea that to be relevant one needed to focus on just 1-2 platforms rather than the entire device ecosystem. And lastly, the time-to-market equation changed for developers so that they could get the application from conception to market in a fraction of a time of what was possible in the past. Finally, the importance of a seamless end-to-end user experience to increase usage and monetisation became a core principle in the mobile applications space.

Market projections

Expectations are that the total global mobile app market will be worth $25 billion by 2015 (up from about $6.8 billion in 2010), according to projections from MarketsandMarkets. Obviously, App Store holds nearly 20.5 percent of that particular cake, while the global market is forecast to record a CAGR (compound annual growth rate) of 29.6 percent from 2009 to 2014. Advancements in network technologies, reduction of mobile data usage costs, growing adoption of smartphones as well as a continuous increase in application usability are some of the critical factors contributing to this immense growth. However, the risk of data theft through delivery of phishing and spyware in mobile applications remain the biggest downside to the surge in the numbers of available applications and capable phones.

According to the report, North America led the market since 2009 with a 41.6 percent revenue share. On the other hand, Asia is the largest market in terms of downloads with 36 percent. The European mobile applications market stood at $1.2 billion in 2009, but is expected to become the largest market by 2015, at $8.4 billion and growing at a CAGR of 33.6 percent during 2010 to 2015. In emerging markets, the dynamics of the app market are quite different. To effectively monetise the significant app momentum, creative strategies are needed to attract new consumers and different business models will be required to make the regional ecosystems viable. This, according to analysts is essentially because the active user base and growth rates in some of these countries exceed those from the western markets, irrespective of the device type. Overall, by enhancing discovery, improving user experience, dropping price barriers, and increasing developer revenue share, the apps ecosystem can continue to prosper.

Prospects in Nigeria

A huge market for mobile apps exists in Nigeria and Africa, analysts have said. This is basically because Africa has been underdeveloped for so long, and mobile technology in general embodies the possibility of bridging the digital divide and making information, entertainment and productivity tools easily accessible to the man on the street. Moreover, the immense work Mobile Network Operators’ (MNO) in Nigeria have done in terms of providing coverage across the continent cannot be over-emphasised. Besides, telecoms infrastructure is perhaps the most robust communication network infrastructure available in Nigeria. Bayo Puddicombe, a publisher from Pledge 51 who developed an app that is available on the Nokia Store, in an interview, said strong demand for applications exists in Nigeria.

He however expressed discontent that the bulk of the supply is coming from foreign markets and developers. “This also means there is an opportunity for mobile developers to create relevant content which will be useful to local users within the African context. “Coming to Nigeria, it is said that one out of every five Africans is a Nigerian. We are also the 7th largest country in the world by population count. “This country has generated a lot of interest from several international players due to sheer volume of traffic generated from people who access the internet using their mobile devices. For instance, Nigeria is rated as the fourth largest market for the Opera Mini (mobile phone) browser in the world today. “What we have found is that for a number of people in Nigeria, the mobile phone is the primary means of accessing information via the internet. This represents a huge market for local applications and tools.”

Challenges

The most significant challenges are primarily due to infrastructure deficits in several key areas such as power, communications, electronic payments, etc. These, according to industry watchers add significantly to the cost of developing applications and also reduce the opportunities for revenue generation. Most indigenous developers are optimistic that there will be considerable improvements in several of these areas in no distant time. On the bright side, the barriers to entry for an aspiring developer are relatively low. “If well harnessed, this can be transformed into a huge industry with significant potential for growth. When critically analysed, the major resources required to develop mobile applications are your mind, a half decent computer and maybe internet access.

Then once you have succeeded in developing a mobile application product and made it available online, you open yourself to not just a local market, but a global one”, Puddicombe posited. Though, there are a number of indigenous developers doing great things in the field of applications development, Nigeria is not close to hitting critical mass just yet. It is in our best interest to encourage more young people to consider this opportunity. This is probably one of the many answers to the unemployment challenges amongst youths facing our nation today. Several critical elements for the establishment of a vibrant mobile developer community are already in place. In Nigeria, funding for innovative start-ups of any nature is still a bit of an issue as the venture capital industry is still in development.

Moreover, a number of Original Equipment Manufacturers (OEMs) have specifically expressed their desire to support local developers. Anybody with the right skill set can readily tap into that.

Nokia’s experience

Mobile phone manufacturer, Nokia is a strong player in Nigeria’s budding applications development market. Nokia strongly believes that indigenous apps developers must build locally relevant apps for the Nigerian market in particular and the African market in general. Olumide Balogun, services manager, ecosystem developer experience, Nokia West Africa, said that opportunities abound for local apps developers in generating huge income from the Nokia Store. Alluding to the opportunities abound in the emerging ecosystem including app purchasing and in-app advertising, Balogun said that there were over 177 publishers of applications on Nokia Store with more than one million downloads for their apps.

He further said that app developers on the Nokia platform have a 160 percent chance of getting their applications downloaded than any other platform. This, he explained, was largely because of Nokia’s widespread availability across the globe, adding that the Nokia Store records 11 million downloads per day. In view of this, industry analysts argue that local apps developers to brace and develop apps that would attract download. “In my opinion, the challenge for application developers in Nigeria and across the globe is to build applications that will attract downloads from millions of Nokia consumers across the world. Developers of any application on the Nokia store get 70 percent of all accruing revenue.”

Expanding market scope

Forging strategic partnership is critical in the emerging ecosystem, industry analysts have said. This, according to them is because within the Telemedia value chain, no single entity can run alone. Only recently, mobile network operator, MTN opened up its network platform to support locally developed applications. To this end, indigenous developers of applications that run on smart phones now have an opportunity to tap into the multi-billion dollar applications development market.

Beyond this, the increasing popularity of mobile applications has driven a need for operators to start focusing on reducing the barriers to adoption. In another demonstration of its desire to further grow the application ecosystem, MTN in strategic partnership with Digital Solutions Group, introduced a number of enterprise apps designed specifically to provide mobile workers access to their organisation’s Enterprise Resource Planning (ERP) systems and applications on the go, thus making them more productive and efficient. MTN Enterprise Apps also helps transforms an organisation’s workers into an empowered mobile workforce that can effectively get work done in or out of the office.

Speaking at the launch of the MTN Enterprise Applications in Lagos, Babatunde Osho, chief enterprise solution officer, MTN, said the launch was another indication of the company’s commitment towards developing a vibrant community of local developers, by providing a platform for ideas generation and more importantly, assisting local developers’ monetise their skills. Industry analyst say applications have now emerged as a fundamental driver of enabling lifestyle and productivity, as consumers want to access relevant content from PCs, laptops, mobile phones and even in-car systems.

Some of the apps showcased at the launch were: The MTN Transport and Logistics App that enables organizations with large fleet, monitor, track and manage their vehicles, drivers and deliveries remotely from their phone or handheld device. The MTN Field Force Automation App, which allows field sales teams take customer orders remotely and initiate deliveries without having to return to the office. Others include: MTN Device Security, MTN Device Backup & Sync, and MTN Cloud Storage Apps. “We are a South African company that is working with MTN Nigeria on the mobile applications development space. We had a similar launch in MTN South Africa last year.

“We are helping MTN to develop apps that can unlock business potentials for large and small business. We have the BATs, Coca-Cola, etc who are using these applications for their workforce management. It is solution that takes care of unique problems. Hence, we emphasise the customisation capability of the solution. Every customer has different challenges. And some have already bought enterprise solutions in their respective companies. This will be a layer on top of that, it is an enabler. Most of the enterprise solutions that organisations have do not have the scalability and mobility. This is an add-on for them,”
Ramsey Mosethedi, sales director, Digital Solutions Group, said.

Conclusion

Most of the resources required are freely available online and so I would say that what is most required is infrastructure in terms of stable power supply and affordable quality internet access. Then we will truly be positioning the country to produce a generation of innovative internet/mobile start-ups that emerge from a garage or basement somewhere and grow into successful multi-million naira entities.

First published on Business Day Media, Tuesday, 03 April 2012