Phone makers jostle to expand $1bn mobile app market

Ben Uzor Jr

               

Foreign phone manufacturers are looking to step up engagement with the local applications development community in the New Year to harness Nigeria’s pool of talent in order to create relevant apps and content that would expand their respective market share, analysts have said. The Nigerian mobile app market, according to them, is valued at about $1 billion. Phone manufacturers are interested in establishing direct ties with local application developers as competition in Nigeria’s smartphone market heats up, analysts told Benuzorreports. “This year, Samsung will have greater engagement with local apps developers. “We will further strengthen our engagement with Co-Creation HUB (CCHUB).

“We will hold quarterly app developers forum. We will also have apps contest and provide SDK tool kits for developers”, Emmanouil Revmatas, business head (hand held), Samsung Electronics West Africa, told Benuzorreports. Samsung’s partnership with CCHUB, BusinessDay gathered is already bearing fruits as a new mobile app called ‘Efiko’ which helps students prepare for JAMB is expected to be launched this quarter. Other phone makers such as Nokia, Apple, Blackberry, Huawei, Google, Microsoft will all be engaging in similar activities in 2013. These, according to industry analysts, are all geared towards galvanising local talent to innovate and create content in order to meet the growing demands of smartphone users.

Besides, the Federal Government also sees the potential of software applications development as a viable platform for wealth creation. The Ministry of Communications Technology has already set up a $15 million Information Technology (IT) innovation fund to encourage local IT business ventures and content developers. Benuzorreports had earlier reported that the Nigerian private sector was showing keen interest in the venture fund. But more importantly, the launch of new mobile Operating Systems (OS) such as the Windows 8 platform which Nokia’s range of Lumia devices is riding on and the much anticipated Blackberry 10 is throwing up fresh opportunities for local app developers to create locally relevant content for the Nigerian market.

Chinese phone maker, Huawei and Microsoft, on Tuesday launched a new Windows Phone for the African continent, called ‘Huawei 4Afrika’. Gustavo Fuchs, director, Mobility Windows Phone, Microsoft Middle East & Africa, told Benuzorreports in Lagos that the mobile device comes with custom applications designed by local African developers for Africa. He said Microsoft believes that will make people switch from cheap feature phones. “We will continue our engagement with the local apps development community to create solutions that add value to the lives of Nigerians”, he said.

With the launch of the BlackBerry 10 platform, Blackberry is looking to claw back its way to the top of the smartphone market. One of the strategies of achieving this goal, according to market watchers, will be through mobile apps. Last year, the Canadian phone maker organised a Blackberry 10 developers conference to assist developers build businesses on the new platform.

“Blackberry 10 offers new opportunities for developers”, Martin Ficke, senior product lead, Africa for Blackberry, told Benuzorreports at a demo session. With applications developers earning 50 percent to 70 percent of the retail price via the app-store platforms of Apple, Google, Nokia, Blackberry, Windows, incubating innovations of young developers could have significant multiplier effect domestically.

“Nigeria has a thriving and growing mobile software start-up scene with a lot of potential for growth”, Teemu Kiijarvi, head of ecosystem and development experience at Nokia Corporation, said.

Infrastructure hinders N900bn investment in data centres

Ben Uzor Jr

There is a N900 billion investment honey pot in data centre deployment, a critical infrastructure needed to provide faster and cheaper internet connectivity, waiting to be tapped, if only the Federal Government can resolve the power and broadband infrastructure short comings, analysts have said.The Ministry of Communication Technology has estimated that approximately 300 data centres will be required in the coming years, to support affordable internet services and software applications in Nigeria. A world class data warehouse is estimated to cost between $20 million and $30 million. This means that Nigeria requires an investment of approximately N900 billion for its planned 300 data centres.

Foreign Information Technology (IT) companies, such as Google Incorporated, Microsoft Corporation and Oracle, have at various fora, said they would be willing to invest in this area. The companies however expressed concern that two years after the landing of fibre-optic submarine cables on Nigeria’s shores, the country has been unable to speed up the pace of wholesale fibre access, due to the absence of a broadband policy that promotes infrastructure sharing and competition. “Technology firms such as Google Inc. are interested in investing hugely in data centres, if Nigeria can address the power challenge and speedily tackle the issue of lastmile connectivity and distribution capacity, so as to spread available bandwidth capacity across the entire country”, Taiwo Kola-Ogunlade, communications manager, Anglophone West Africa, for Google, told Benuzorreports.

“Yes, broadband infrastructure is important but power is even more critical. Today, Nigeria is still struggling with unstable power supply. Importantly, data centres consume a lot of electricity”, Taofeek Okoya, director, business and strategy, for Kits Technologies, a data centre infrastructure provider, told Benuzorreports. “Nigeria is indeed a huge market and the potentials here are enormous for local and foreign IT companies,” he said, adding that “As I speak, there are lots of data centre initiatives on-going in the country. A lot of banks and government agencies are building data centres.”

Okoya further said there was great necessity for data centre owners to build competent human capacity to manage their high cost infrastructure. Data centre deployment, according to analysts and market watchers, is a big business, capable of creating wealth and job opportunities. Benuzorreports gathered that a large data centre might have from 100 to as many as 300 on-site employees. But interestingly, data centres give impetus to Nigeria’s online business community to provide innovative services cost-effectively. A senior executive at Microsoft West Africa, who pleaded anonymity because he was not authorised to speak, said massive investments would be ploughed into data centre deployment over the next few years.

“Hopefully, when we get power and broadband right, then technology firms like Microsoft can concentrate on bridging Nigeria’s and indeed Africa’s digital divide. Data centres will also create a lot of employment for Nigerians directly and indirectly,” he added. The rise in the availability of international bandwidth connectivity from underwater fibre-optic cable systems has attracted a lot of foreign ICT companies into the country. Data centre deployment is one area expected to witness a boom in coming years. But the absence of last mile broadband connectivity, technical know-how and expertise, continue to slow down progress in data centre deployment.

Giving her perspective on what needs to be done to address Nigeria’s internet access problem, Funke Opeke, chief executive officer of MainOne Cable Company, who was quoted in a recent industry report, said “We really need to agree to a commercially viable framework for infrastructure sharing with incentives for the incumbent operators to share their proprietary networks”.

Global data centre operators have flocked to the Nigerian market, particularly since 2011, with the likes of Google’s cloud platform aggressively marketing their services to corporations. United States software giant, Microsoft, launched its global Office 365 cloud solution in Nigeria in June 2012. Dell’s global CEO visited Nigeria in July 2012 in a bid to promote Dell servers or local data warehousing initiatives.

Mobile network operators have not been left out of the party, as MTN Nigeria in 2012 introduced a wide variety of enterprise cloud-based services, supported by its state-of-the-art data centre. Also, Gateway Communications, a pan-African service provider with the largest Multi-protocol Label Switching cloud in Africa, bought by Vodacom in December 2008, introduced its cloud services to the Nigerian market in 2011. Besides, indigenous firms are increasingly looking at partnering with global vendors with experience in cloud system and data centre development.

According to a report, Internet Solutions West Africa invested N1.65bn ($10.5m) over a two year period (2009 to 2011) in building two data centres in Lagos, covering a combined space of 125 sq metres. It further invested N225m in upgrades and expansion of its Victoria Island, Lagos, location, in 2011. Resourcery Nigeria, another local IT firm, established its own Cisco Unified Computing System in January 2012, targeting telecoms companies and banks. In addition, TTC Technologies is partnering with the Obafemi Awolowo University, Ile-Ife, to build private clouds for corporate customers.

N61.65bn market awaits Nigeria virtual mobile operators

Ben Uzor Jr

An idle capacity valued at over N61.65 billion in Nigeria’s mobile telecoms market is waiting to be tapped by virtual mobile operators, Benuxorreports has gathered. With 56 percent utilisation of total installed capacity of GSM operations, according to TNSRMS in its latest research report, mobile virtual network operators (MVNOs) have a huge prospect in the Nigerian telecoms market. The MVNOs are expected to take up the 44 percent which is not utilised, says the report. A mobile virtual network operator is a mobile operator that does not have its own spectrum and also does not have its own network infrastructure but usually has business arrangements with traditional mobile operators to buy minutes of use for sale to its own customers.

Though the average mobile phone user in Nigeria owns 2.39 SIM cards, according to a 2012 study by research firm, Informa, telephone penetration is still only 61 percent. As at November last year, Nigeria had 150.7 million connected lines. The total installed capacity on all networks was calculated at 211.7 million. This means only about 56 percent capacity is utilised.  The value of the remaining is arrived at by multiplying 60.98mn by monthly ARPU of N1.011 to give N61.65 billion. The TNS research which looked at how the telecom market would change in 2013 said that despite current quality of service problems experienced in the country, the MVNO is a possibility. When this happens, it would disrupt the competitive landscape of the Nigerian Telecom market, the research said.

Seyi Adeoye, a director at the TNSRMS, said there is huge opportunity for MVNOs in the Nigerian market. “It is a fantastic way to effectively utilise the idle capacity,” he said, adding that in other markets, there are MVNOs because of the profitable nature of the business. Wale Goodluck, corporate services executive, MTN Nigeria, told Benuzorreports in a phone interview, “I think it is a natural growth direction in the industry. But the reason why we have not seen MVNOs in a country like Nigeria is that there is not enough capacity in the system. Perhaps when there is sufficient capacity, we will be willing to sell wholesale capacity to any company who wants to sell retail telecoms services under another brand name”.

Speaking in the same vein, Guy Zubi of Pyramid Research pointed out that the main challenge prospective emerging market MVNOs will face is not necessarily low Average Revenue Per User (ARPU), but network capacity and the extension of the addressable market. He advised, “A MVNO business model established in an emerging market will rely on the same basic principles that apply to a developed market MVNO. “However, emerging Market MVNOs must be more cost-efficient than their developed market counterparts. They must also be more cost-efficient than emerging market operators, most of whom are already fairly creative in keeping costs down”, he said.

According to the research, mobile number portability (MNP) which is currently being experimented would further increase the level of competitiveness among the current operators, with direct impact on products and service pricing. The NCC commenced testing of proposed MNP initiative last December, with eyes on April 2013 for likely roll out and further engagement with the Nigerian Mobile Operators.

Competition within the Nigerian Telecom market is aggressive: Penetration of Telecom services in Nigeria is well over 70 percent, the market is still growing but at a significantly reduced tempo and prices are declining. The research therefore said the immediate priority for network operators is the need to accelerate diversification of revenue streams. This would also help reduce churn rates and increase Average Revenue Per User (ARPU).

With about 80 percent of the Nigerian Telecom market revenue within the middle and high value telecom segments, the research advised that there is a need to develop a unique engagement model for this class of Nigerians, especially enhancing personalisation of mobile products/services and context based marketing. The Nigerian middle class is expanding and fuelling growth in Africa’s most populous nation. For the middle class it is all about lifestyle and the growing sophistication of the class is coming with new services such as fertility treatments, online retail stores, auto workshops and funeral homes…to them; it’s all about lifestyle.