Why South Africa (and Mxit) is leading the mobile internet revolution

People are often surprised that one of the world's most developed mobile internet markets is South Africa. The country has massive mobile internet usage driven by high penetration of mobile-internet enabled handsets and low data charges (around 2 Rand a MB or US$ 0.25) which is amazingly cheap, especially when a basic broadband connection will cost you 200+ Rand a month.

Data from admob (the world's largest mobile ad network) shows that South Africa is one of the biggest mobile ad markets in the world with 450m ads served in Q2 08, around 60% of all African traffic, 2.7% of total traffic, the fifth largest in the world behind only USA, UK, India and Indonesia.  South African traffic is also fairly high value in terms of typical CPMs (unlike Indian traffic for example), and can actually deliver higher CPM rates than traffic from the US and Western Europe.  As a result, South Africa is being actively targeted as a market by a number of mobile content and service providers. 

South Africa is home to Mxit - a mobile social network with massive traction

One of the real signs that South Africa is a big player in the mobile internet is that it has produced has one of the world's most interesting mobile startups, Mxit - probably the first mobile social networking service to go mass market outside of Asia.  As early as 2006 if you talked to any teenager in South Africa with enough cash to have a java enabled phone and top it up with credit they would tell you about Mxit - not facebook or myspace. 

Mxit is basically a downloadable mobile phone application that offers chat-rooms and interfaces with instant messaging services like AIM, MSN and Gtalk. 

Other features include an mp3 player, access to phone file systems and cameras and a range of premium content services from Mxit and third parties within the Tradepost section of the site.  The Mxit Music section is creating the equivalent of myspace for the South African music scene, allowing artists to sell digital tracks to the mass market.   Mxit is also being used to deliver education services like maths tuition - early days but really inspirational when you think of the potential this kind of thing could have for African development in a few years time.

The stats are absolutely jaw dropping:

• 9m registered users, growing at over 10k users a day
• 14 m logons per day
• 250 million messages sent per day over the network

Mxit uses its own virtual currency (Moola) which users can use to pay for messages in the chatrooms as well as for premium services and content.  They also make a fair bit from advertising with major brands using the site to reach its youth audience. 

Naspers (the News Corp of South Africa) did a very smart thing and bought 30% of the company in 2007 -  big media companies in Europe and the USA have not even begun to think about buying up mobile startups like this.  Mxit is beginning to expand internationally with around 1m users the home market, in other African countries, as well as Asia and Europe. 

The question is, can South Africa capitalise on its current leading position and build a real long term advantage in the mobiel internet industry?  Already, South Africa's hard won position is under threat as the operators begin to raise their charges for data and roll out transcoders and advertising overlays, which are frustrating the efforts of local developers seeking to launch mobile applications that can follow in the footsteps of Mxit.  Can South Africa keep up the momentum or will this be a missed opportunity?

Download Mxit on mjelly (PC)

Download Mxit on mjelly (mobile)

Comments

[Pieter VW]

Mxit has done very well indeed and still based in Cape Town I believe - Vodacom are putting their data prices up so we will see what happens eh

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[Vuvuzelas]

Really interesting, keep up the good work!!