Underground iTunes: Australian Start-Up Drives Apps Potential to Emerging Markets
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Underground iTunes: Australian Start-Up Drives Apps Potential to Emerging Markets

biNu, a cloud platform which enables web access to rival the iPhone… but for 2G feature phones, is proving hugely successful across Asia and Africa. Kathryn Cave speaks to co-founder Gour Lentell about Mills and Boon, credit cards and the surprising street network that could propel African consumers firmly into the digital age

It is 10.15pm Sydney time when I finally connect with Gour Lentell, “This is part of the challenge that Australian start-ups face,” he says, Australia has a large economy and land mass, but it tends to be a little insular. To be successful, “you need to be global from day one…. and you need to be prepared to do phone calls at all hours.”

Lentell and his co-founder Dave Turner have a long history in start-ups. They began as IT consultants in the 90s, began their first business serving ads in the dot com boom, but when they sold it on, “the price was largely in shares which went down the toilet.” After that they went into SEO and then other internet businesses. Lentell is keen to stress that their background is mainstream internet rather than mobile, which gives them a different edge.

“In 2008 we started getting interested in mobile,” Lentell tells me, “this was coming off the back off the iPhone. You can trace a lot of things back to that moment in time when things started changing.”  The iPhone made people realise that consuming a wide range of content on mobile phones, from books to magazine, from films to music was not just viable but also extremely convenient. Prior to that, web browsing on a mobile was slow, sluggish and simply for emergencies. “What the iPhone did is it showed people that it is pretty fun to search for apps.”

Oddly enough, buNu came about through a Sydney company which was involved in the paging industry. This company wanted some help with investing and whilst Lentell & Turner were unconvinced by the potential in this market, “we were very impressed by the technology. And through the process of conversations we realised the technology could do a better job on mobile internet than anything else pre-iPhone. The majority of the world may have access to a mobile, but doesn’t have an iPhone.”

From there they acquired the patents, spent two years testing the software and finally ran a small, strategic test in South Africa during the 2010 World Cup. The software was released into the wild in January 2011 and the following results were impressive: three million active users by January 2012; five million active users by January this year. “The dominant market initially was Asia and Africa was just behind that,” says Lentell.

The market growth rates in some of these countries makes for some pretty interesting reading. Iran had a 409% growth rate between January 2012 and January 2013, taking its monthly active users up to 55,891. Jordan had a 367% increase in the same time period, taking its monthly active users to 41,079.  While this March the top three countries, based on active users were India, Nigeria and (more surprisingly) Ethiopia. Apps favoured in those countries are diverse with news scoring highly across the board, along with YouTube, Football, Facebook, Worldread and BiNu messenger.

How Street Hawkers Could Have the Upper Hand on iTunes

Mobile phones are a prized possession in most countries. Yet the majority of consumers in emerging regions live out a day-to-day existence in cash orientated societies. These people would rather pay a small amount of cash per week than a larger amount on a monthly basis. They don’t have the cash flow luxury to be able to do the former.  

This means phone networks have evolved to make it easy for consumers to pre-pay. In practice this results in a sophisticated retail network operating on the street to sell top-up.  This is a price driven market, people have dual sim cards and they switch networks very easily, they have less attachment to their number than people do in developed countries. Yet, unlike the West, the principle billing relationship is with their network provider, via an army of street vendors.

“In many countries you get guys standing on street corners selling scratch cards for air time,” Lentell tells me. “They eke out a living buying [say] $100 airtime at 8% wholesale rate, standing around selling scratch cards for the day and making $10 profit.  I was quite amazed to discover in Zimbabwe USD 2–3 million a day is spent on airtime… in cash. This is quite a staggering statistic and it is the same everywhere.”

“It is easier to buy airtime than to pay your bills, or find a bank or ATM,” he continues “It is quite phenomenal and in a lot of respects it is the most extensive retail distribution network in a lot of these countries. It is far more extensive than banks or shops or retail outlets or whatever else is bought in the economy. I was in Zimbabwe last year and I was amazed by how convenient it was to buy airtime. In the city, on a whim, you could turn around and find five people who’d sell you $5 of airtime. There was no need to make a phone call, get to a website, there were people everywhere. It was much easier than in Sydney.”

Outside of emerging economies there has been a noticeable shift in the industry since the iPhone. “The minute a user gets a smartphone they start building a primary relationship with iTunes [or if they have an Android device] Google Play,” says Lentell “This means many operators rue the day they started promoting the iPhone because they’re essentially losing their main relationship with many of customers. Once you have an iPhone you can switch networks and take your handset with you, but you will always retain your account relationship with the iTunes apps store.”

Yet the iPhone has no sway in emerging economies. The Apple ecosystem is essentially aimed at wealthy Western patrons. In the smartphone (and tablet) arena, Android has been gaining a footing for the last 12 months. However, in emerging regions things can get a whole lot more complicated because many people simply don’t have credit cards.   

The Incredible Potential in a 1.3cm x 1.6cm Screen

The African continent is world renowned for its use of mobile.  M-Pesa is the flagship of mobile banking worldwide. Yet what many people in the West forget is that all this is being done on feature phones, with a tiny screen that is barely internet enabled: “These are not fancy-dancy smartphones with cool apps provided by a bank; it is all done on a feature phone with SMS style interface. But the consumers in those countries are human beings and want the same things we all want. They love to be entertained, they love watching videos.”

There is a growing demand in emerging markets to access digital content. The incredible prevalence of mobile phones means that consumers can see the huge potential in these devices. In many places you can pay your bills via mobile. There are schemes being initiated where you buy solar power through your mobile phone. Yet it is not that easy to access entertaining content.

The challenge for operators is offering content experiences for consumers which are on a par with the app stores and letting them pay for these via their mobile phones. “That is the golden nugget operators have,” Lentell explains and it is precisely what he is trying to do at the moment: “If network operators can partner with people who provide content, it is great for the consumer because they can access the content they want and great for the operators because they can retain the primary billing relationship.”

“The consumer in Nigeria [for example] wants to get everything you use in London, just as much as you do,” he explains. “They want videos and music and games and entertainment and they’ll pay for it. They pay a little bit and they’ll pay more and more over time. The amount we spend on entertainment is incredible when you think about ten years ago. And more and more of it is starting to go through your mobile phone.”

 “The irony is,” he adds “if I count out the number of screens in my house it is staggering, between the smartphones and the tablets and the TVs there are an awful lot of screens in our lives. But for many consumers in emerging markets the only screen in their lives is the mobile phone and they probably haven’t had it that long.”

A 50c Mills and Boon Book Could be Transformational

The future, as every marketer knows, is in content. But that doesn't just mean video, audio and all the impressive high tech stuff. It also means basic amenities like books. In many regions around the world there simply isn't access to reading material. And at the most basic level, the abundance of mobile technology facilitates literacy, and improves people's economic potential. “Our colleagues in a rich city like Sydney might find it strange,” says Lentell, “but in many countries [mobile] is the only way many people would be able to read a book.”

Lentell wanted to make it easy for people to access books and so developers are biNu built a reading app and populated it with books from Project Gutenberg. “When this received a good response we came across Worldreader, a not-for-profit based in Barcelona and San Francisco, which enables literacy through digital books. Its first focus had been getting the Kindle into schools into Africa. However, once they were on the ground they realised just how many people had phones and how many people would like to read via this method. We gave them our application and now half a million people are reading books on the Worldreader app on BiNu. That was a very satisfying outcome. But it is just the beginning.”

This March biNu signed a deal with Harlequin Publishers, to make over 8700 books, most notably Mills & Boon romance novels, available for purchase. “They came to us,” Lentell tells me.  This seems an incredibly smart move as Mills & Boon has massive appeal in markets like India. Now the only thing left is to join the dots. If consumers in emerging markets could pay for stuff using this sophisticated retail network of mobile pre-payment hawkers perhaps you could make everyone happy?

“If all you have is the mobile phone and even if it is a small screen you're as interested as being entertained as anyone else on the planet,” Lentell concludes, “this is just the beginning for these markets and the desire to consume is as strong as anything we might feel. And in a sense it presents an even more interesting market because the pent up demand is huge. The challenge is how to deliver content, education, knowledge through that one small screen.”

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Kathryn Cave

Editor at IDG Connect

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