Sunday, August 22, 2010

Why I will not be moving from Safaricom

For those who've been reading my blog you know that I have a love/hate relationship with Safaricom. One week I will lavish praise on them, the next I'll be trashing them. With such swinging passions, it is easy to find inspiration to write on them, and resultantly I do it often. This week I'm at it again, giving my 3 reasons why I'll be sticking with Big Green and ignore the Vuka to Zhairtel wave currently going on.

1. Data Services.

Safaricom's recent press release responding to its competitors drop in voice call charges captured one thing right on the mark. They are no longer just a mobile telephone company, they are a total (communications) solutions company. Just like DoCoMo of Japan, Safaricom early on realized that voice services were not enough and their future lay in data/internet services on mobile phone handsets. They've gone ahead and backed this conviction with some serious investment in 3G, fibre, WiMax, and now 4G. Safaricom has not stopped at infrastructure, they are also leading in the development and distribution of local content. Their safaricom.com portal and facebook face off promotion are some examples of this.

What Zhairtel might not see is that with the rapidly improving network infrastructure and availability of smart phones a time will come when VOIP is a cheaper alternative to voice calls. When this happens, I want to be with the operator who has invested in data services.

2. M-PESA

Two years ago, I blogged here how Safaricom would transform itself into a bank on the back of its wildly successful MPESA product. At that time there were 2 million MPESA users, right now this figure has exploded and more than 10 million have MPESA accounts. Well, Safaricom has not out-rightly transformed into a bank, but products like M-KESHO show that it is serious about its financial services division. I'll make another prediction here, and that is that in 3 years, M-PESA and its offshoots will be Safaricom's largest revenue earner and flagship product.


I strongly believe MPESA is the future of commerce in Kenya, with more and more services going online, M-PESA is primed to become the number 1 payment system in Kenya. Already PayBill is being used for services as varied as airline booking, classifieds, and utility payments. Buying goods at the supermarket seems also to be on the cards for Safaricom considering their Buy Goods menu under the M-PESA menu.


Kenya is well positioned to be a leader in mobile commerce and Safaricom is in the best position to lead this revolution.


3. Safaricom Innovation Board


Of all things that make me want to remain with Safaricom, this is probably the most important. I have seen a Vuka phenomenon before and after all the excitement I know most of us went back to Safaricom with our tails between our legs.


Innovation is the lifeblood of any company and Safaricom seem to understand this very well. Price wars will work for a while but what happens when Safaricom also reduces its price? As the market leader it means Zhairtel will have to go back to the drawing board, and if start another price war, they might just push themselves into bankruptcy and/or another sale of their business. The only way for a company to maintain its market share and outperform the competition is to innovate. The Safaricom Innovation Hub will not only capture the best ideas in the country but will also (however unfairly) own them exclusively to the detriment of its competitors

So today, as you laugh at the Inspekta Mwala ads and buy your umpteenth Zain card, I will remain with my 'ol green 0722.

NB: On page 7 of the Sunday Nation (August 22, 2010) there is an ad of green text on white background that reads "MASAA YA KUBAMBA INAKUJA". I think Zhairtel might want to hold off the popping of champagne bottles for now if this ad means what I think, which is that Safaricom is not going to lied down and let its customers walk away.

2 comments:

raymondchepkwony said...

I think you give good reason as to why you arent jumping on to the bandwagon.... HOWEVER...I think Safaricom is hell bent on Milking its consumers dry! I agree that they are in business to make money but they are making SUPER NORMAL PROFITS! Many will indeed keep safaricom lines...BUT they will have the lines a secondary line and Zain as a primary line! Safaricom's move into 4G might tip scales on their favor but...this will target the more up-market folk..What about those in Rural areas who will be served by Zap and whose only use for a mobile phone is VOICE??

startupkenya said...

Raymond,

Like everyone else it does kinda hurt when Safaricom makes so much profit and I'm spending so much. But really should I?

To begin with I've had the Zain choice from day 1, but despite many false starts I've always come back to Safaricom, and the fact that 16M others have done so too shows you that consumers are willing to pay for their service.

Let them continue making super normal profits, as long as they keep innovating.