Network effects

An African messaging app could beat out WhatsApp, Line and WeChat in India

January 29, 2014
Obsession
Mobile Web
January 29, 2014

This is what 21st century globalization looks like: Mxit, an African company has just announced its intention to enter the Indian market, taking on established players from the US and newer contenders from China and Japan. Mxit makes a popular mobile messaging app and claims 7.4 million monthly active users, with just under a million of those outside South Africa. Some 35 million Indians use WhatsApp and 10 million use the Japanese app Line. China’s WeChat doesn’t disclose country figures but it also appears to be popular based on anecdotal evidence.

So what does a minnow like Mxit have that makes it so confident it can crack India? The answer is simple: a vision beyond smartphones. Unlike its bigger, richer, more established competitors, Mxit offers connectivity to old fashioned “feature phones,” of which there remain many users in India. In the third quarter of 2013, the most recent for which figures are available, over 80% of phones shipped were feature phones. This is changing—some 225 million smartphones are expected to be sold in India this year— but feature phones still dominate both sales and usage.

A big reason for Mxit’s popularity in South Africa has been that it supports feature phones, allowing users to use the app with weak 2G connections on phones never really made for the internet. This leads to network effects; people with many friends on feature phones will want to use a service that can help them connect to all their friends, not just those with smartphones. In poorer countries such as South Africa and India, the likelihood that a group of friends will use a wide variety of phones is greater than in the all-but-saturated mature markets of the west. The Indian messaging app Hike does something similar, using SMS to get messages to feature phone users. But that deprives them of functions like sharing photos.

Fortunately, mobile messaging is not a zero-sum game. People tend to use a variety of apps to connect with different sets of friends. But the most successful are those that understand their users’ needs. And a company from a developing country may be best placed to understand the needs of another developing country.

Correction: A previous version of this post said that WhatsApp had 30 million users in India. It is in fact 35 million.

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