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Safaricom’s End Game? Smart Mobile Internet “Things”

Safaricom is a tough act to follow. It’s a company that has been remarkably successful for the past decade or so as Kenya’s leading mobile network. It has over 20 million subscribers and in excess of 15 million M-Pesa users. Over 8 million mobile subscribers use Safaricom as their main Internet Service Provider (ISP). Safaricom absolutely dominates the mobile market in Kenya in all its myriad forms. Yes. Safaricom is a tough act to follow.

If anyone thought that Safaricom ever plans to rest on its laurels and give up some of its dominant market leadership, I would like to correct them of any illusions they may have through this blog post. You see, there are several new insights that came to my attention this past week about Safaricom, that only serve to reinforce the view that its going to be business as usual, which basically means its market leadership will continue.

The first is that during an event this past week, a statistic was shared that 30% of mobile devices now being sold in Kenya are smartphones. This is really impressive since around a year ago, this number was probably under 10% of ALL mobile devices being sold in Kenya. The second insight was finding out that Safaricom saw a 500% increase in the number of smartphones using its network from a year ago – this growth is quite simply eye-popping! The last thing is finding out that Safaricom intend to stop selling feature phones at their retail stores soon so that they can focus on smartphones exclusively (yes, really!). This last revelation is quite startling since Safaricom has a reputation of being the “Mwananchi’s” mobile network which meant being focussed on the bottom and middle of the pyramid. In fact, you could say that Safaricom IS the “people’s choice” in spite of erratic services which at times are much worse than those of its competitors (yes, we all know about the regularly dropped calls and M-Pesa outages).

It does not end there. There have been rumours for sometime now that Safaricom is planning to launch a branded mobile app store to sell mobile apps to its massive subscriber base who would the use M-Pesa and Airtime to pay for mobile apps. This initiative has apparently shifted into high gear and the Safaricom mobile app store is going live any day now, which actually validates its decision to focus on smartphones, and, presumably tablets by extension.

The above rationale totally makes sense since entry-level smartphones now cost less than Kes. 8,000.00 in Kenya after the success of the Huawei IDEOs selling more than 400,000 units in Kenya over the last couple of years. We are now hearing rumours that a Kes. 4,000.00 Android Smartphone will be in the offing from Safaricom before the end of the year. We are also seeing entry-level tablets approaching the Kes. 10,000.00 mark which is hugely impressive by any measure.

Safaricom placed its bets early on data when it secured the first 3G license in Kenya a few years ago as its competitors balked at the massive cost – which led to Safaricom becoming Kenya’s first and currently largest 3G network. Even though Safaricom probably has the most expensive 3G service in Kenya, with no unlimited packages on offer, it still has the largest number of Internet users in the country.

As Safaricom’s voice revenues start to decline and growth from M-Pesa will eventually hit a plateau, the reality is that data is the future for mobile networks globally and nothing consumes data like smart mobile internet “things” such as smartphones and tablets. This is what Safaricom is banking on and even before we can start talking about 4G in Kenya, we can rest assured that the uptake of 3G via smart mobile internet things is only going to get bigger. In concluding, here we go again, Safaricom, and quite possibly, this could be the start of the end game for its competitors.

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