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Mxit Needs Repositioning – Steven Ambrose

Published by on Jul 31st, 2013, No Comments

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The rapid growth of the WhatsApp instant messaging (IM) client and the decline in the volume of chat messages going through MXit over the past twelve months in South Africa, are indicative of the change in the way people are using their mobile phones to communicate with each other.

Steven Ambrose, Strategy Worx CEO, says that according to industry sources WhatsApp numbers have doubled over the last twelve months and are heading towards the 10 million user mark in South Africa.
MXit revised their reporting of active user numbers in January 2013 to a 30 day standard, resulting in a more accurate picture, with MXit now reporting around 6.5 million active monthly users on the platform in South Africa.

This active user number for MXit is little changed from a year ago, and while that is good news in the face of the growth of the other IM platforms, MXit has experienced a downward shift in engagement on their platform from its active users, especially with regard to person to person messaging, which has declined by approximately a third over the last year.

“MXit has been the dominant player in the IM space over the last couple of years, with its user base growing steadily, while WhatsApp was a relatively small player. The answer as to why there has been a sudden change lies in user behaviour and how the technology actually works,” Ambrose says.

Defining the landscape

WhatsApp was the first major IM client that, like SMS, only requires you to know someone else’s number, as opposed to requiring users to create an account and know the user names of the people they wish to be in contact with. However, unlike SMS, it uses a data connection and therefore enables users to message each other at a fraction of the cost compared to SMS. WhatsApp’s popularity has been driven by its ease of use, people’s desire to share their lives, the reduced cost, and the viral spread of the application as more and more people use it, says Ambrose.

Most new so-called feature phones and almost all smartphones allow people to chat and share pictures from their phones using apps like WhatsApp at minimal cost. WhatsApp groups now support up to 50 people at a time, enabling large scale communication with friends and family.

The answer to why MXit user engagement numbers have declined lies in how MXit functions as a platform. “MXit was never a true IM client, although it facilitated direct messages between people. It was more akin to a mobile version of an internet chat room service like Internet Relay Chat (IRC). MXit later evolved into a platform with an app store and its own currency (Moola).” 

“And it’s not a true social network either, without the functionality and look and feel of Facebook, despite various claims of MXit being Africa’s largest social network. However, it was used to talk directly to friends and family as one would with an IM client, when there was no other viable option to do so locally,” he says.

But the local mobile device landscape has since changed fairly dramatically in the last two years. Smartphones have become a major player within the mobile space as have other social networks. Data costs have dropped dramatically as well.

With the number of smartphones breaking the 10 million mark in South Africa in the last year, people began to use IM and clients like WhatsApp and the mobile version of Skype, along with many others fighting for opportunity in this space including WEChat.  As a result MXit as a platform started to lose its attractiveness to its active user base.

MXit’s way forward

MXit faces an uphill challenge. After being acquired by World of Avatar in late 2011 and stating in early 2012 that it aimed to double its user base under the leadership of Alan Knott Craig Jr, MXit then had to grapple with its own identity and direction as a company after Knott Craig Jr suddenly left. MXit is not a pure IM platform like WhatsApp, nor is it a rich full social media platform such as Facebook.

“It now remains to be seen whether the company has the ability to turn the numbers around and begin growing significantly once again.  MXit’s ability to do just that should not be underestimated. MXit’s strength is that it is not simply comparable to other platforms in the social arena and it understands and was designed for the emerging market in South Africa. This means it is far lighter on data and has a much greater penetration into feature phones,” Ambrose says.

The power of MXit lies in the fact that users don’t have to know the people they ultimately connect to, as users all log in to a central platform. MXit also has the fairly unique power to organise users around a common topic.

The company says their research shows that users tend to share on MXit in a very different manner to either pure IM style utility platforms such as WhatsApp, or social media platforms like Facebook, which tends to reflect the near past experiences of people, rather than the current socially based group experiences on MXit.

This has been seen with MXit’s use as an educational tool with programs like the Dr Math service where tutors answer pupils’ questions on MXit along with educational apps which tests pupils’ knowledge of subjects like Maths and Science.

Furthermore, both the ANC and Cosatu announced they would be using MXit to educate inform and mobilise their members, says Ambrose. The company also has substantial financial backing as well as experienced business leaders running the company, with Paul Harris, previously CEO of the First Rand Banking Group, sitting on the board and a new CEO is expected to be announced soon.

“MXit needs to reposition itself as a business and get back to what it is best suited for – connecting people who don’t know each other over common interests. It’s a foundational pillar of the use of the Internet and as the number of people with access to the Internet continues to grow in South Africa, MXit has an opportunity to turn its position around and grow into the future,” Ambrose says.

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