If you listen to Kennedy Kachwanya, African developers should be developing for smartphones, not feature phones. In fact, just last week, I was talking with Moses Kemibaro about InMobi’s retreat from the African market. InMobi saw its future in video ads and left Africa’s feature phone users in search of smartphone riches.
I wonder how both are feeling this week, now that WhatsApp sold for $16 Billion to Facebook. (As a fun aside, check out TechZim’s take on what $16 billion buys in Zimbabwe, complete with infographic.)
Feature phone riches
See, I’m in agreement with the kids over at TextIt. Facebook bought WhatsApp not for their technology prowess – they wrote their whole application in J2ME – but for their user reach and momentum. Yes, really, Java 2 Mobile Edition, which few of you remember, much less ever wrote code for. But there are hundreds of millions of J2ME handsets still in use around the world.
Make those handsets use the relatively cheaper data layer, instead of exorbitantly expensive SMS technology to send data, and boom! You have rabid adoption rates on feature phones that scare Mark Zuckerburg to making new billionaires overnight, with nary a smartphone in sight.
Oh and I’ll leave you with this. In addition to $16 billion for the company, Facebook is paying $3 billion in employee retention bonuses… for 55 staff. You do the math on that one.
$19B is a lot to gamble that MNOs in developing countries won’t move to different business models. Given that the widespread adoption of smartphones is inevitable, wouldn’t their pushing people towards monthly plans (versus topping up) that include unlimited voice and SMS, but limited data, make the MNOs more money and simultaneously make WhatsApp the next Myspace? This has already begun in Nigeria (http://businessdayonline.com/2013/10/telcos-adopt-unified-price-plans-as-smartphone-penetration-rises/).
Smartphone penetration may be rising at 20% per year, but we’re still at 18% smartphone penetration in Africa (see this). So yes, smartphones are the future, but MNOs and software developers need to eat today. Just ask Pets.com about being too early to market.
Can’t speak to the nutritional needs of app developers, but Mo Ibrahim and Carlos Slim are faring quite well. They and the other MNOs know how to take care of themselves, which is precisely why I wouldn’t bet on long-term, SMS-based solutions. They know the future is in selling mobile data services.
Should short-term development projects exploit temporary market inefficiencies, i.e. take advantage of “free” communications channels? Absolutely! One would have had to be crazy not to accept the free money dot.coms were giving away in 1999. But a rational pet owner wouldn’t have counted on getting subsidized pet food forever.
(BTW, even very smart people make stupid investments: Jeff Bezos/Amazon bought 54% of pets.com in its first round of venture funding.)
Ah, do not confuse feature phone with SMS. I don’t think SMS per sea is a great long term bet, but messaging via a data later (whatsapp) is. Many things via the data layer are, and most feature phones today can support data later activity.