Making Mobile Apps...

Making Mobile Apps Work at the Base of Pyramid

Case studies from Ghana, Nigeria, Mozambique, and Zambia

This set of reports assesses existing mobile application (app) business models targeted at, or suitable for, people living at the base of the pyramid (BoP). The reports address specific pain points for app developers and provide practical, actionable advice. Their recommendations are specific to each of the four countries: Ghana, Mozambique, Nigeria, and Zambia.

While assessing the app markets in the four countries, it quickly became clear that there is a wide range of business models. Each business model is unique to the sector and to the business problem the app is attempting to address. The reports focus on three areas common to all business models to provide maximum value for app developers:

  • Revenue sources - Generating revenue is at the heart of any business model. App developers must choose how to make money from their products and services. Options include in-app advertisements, pay per download of content or app, in-app purchases, upgrading free apps to more feature-rich ones for a fee (freemium), and subscriptions.
  • Distribution channels - The availability of an app is dependent on its distribution network. Apps can be distributed through app stores, mobile operators — through unstructured supplementary service data (USSD) services, for example — or through local distribution networks.
  • Payment facilities - Main payment options for app developers include premium short message services (SMSs), airtime transfers, mobile money, and bank-based payments such as electronic transfers and checks, or debit and credit cards.

The reports also present a brief assessment of app incubators or hubs. These incubators play a significant role in supporting and advocating apps. However, this role is often only partially realized and each of the reports makes locally relevant recommendations to address this. The key findings in each of the three areas, which also apply to app incubators, are:

  • Revenue sources - Multi-sided platforms are an under-exploited business model. Apps are more likely to make profits and be sustainable if they provide services to consumers that are paid for by businesses - the other side of the platform. Of course, the multi-sided model is dependent on apps addressing problems or needs experienced by both consumers and businesses.
  • Payment facility - Premium SMS is the ideal payment facility because it reaches all mobile subscribers regardless of phone type. However, premium SMS is challenging because mobile network operator (MNO) revenue shares can be very high. Nevertheless, this report finds rates are negotiable and MNOs are beginning to realize that high revenue shares are slowing market growth. At the same time, increasing smartphone penetration and mobile money adoption is rapidly creating alternative payment facilities, outside of MNO control.
  • Distribution platform - MNO stores are ideal distribution channels because of their access to local subscribers, but this is unrealized. As a result, independent distribution is the most common option. The Ovi Store[1] is a viable alternative for feature phones, but this is an option only in Nigeria where Ovi Stores have local presence. As smartphone adoption increases, Google Play will become dominant. There is a commercial opportunity for Google to register developers as merchants, but few African developers can take advantage of the opportunity due to different combinations of regulatory and market barriers.
  • Incubators and hubs - The hubs and incubators the team visited were staffed by inspired and motivated personnel. The more structured the environment, the more beneficial it is for developers; specific programs are provided at regular and planned intervals. The target is to better mix commercial realities of launching a business with technical skills already available in the hubs.

There is a large untapped potential in all four countries. The primary obstacle to realizing this potential is commercial intelligence that can enable viable and sustainable app businesses.

[1] The Nokia Ovi Store is an application store for Nokia phones. Nokia was recently purchased by Microsoft. 

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