Even a small fraction of a dynamic market of some 101.8m SIM cards, according to May 2012 data from the Nigeria Communications Commission (NCC), can lead to large scale profits. Thus while smartphones account for a mere 5% of the market – over 5m users – intense competition for a share of the mobile app segment is spreading to Nigeria and users’ appetite for app downloads appears substantial.
However, while the penetration of global apps matches that of smartphones in the market, the challenge for Nigeria will be to grow and harness the potential for local app development. As mobile banking platforms develop to offer value-added services to conventional mobile users, localised apps will develop as an ecosystem for Nigerian smartphones. With app developers earning 50% to 70% of the retail price via the app-store platforms of Apple, Google, Nokia, RiM and Windows, incubating young developers’ innovations could have significant multiplier effects domestically.
COMPETING PLATFORMS: While still small as a share of the total market, smartphone sales are growing in line with the industry and disrupting Nokia’s traditional lead in Africa’s conventional handset market. RiM estimated 2.4m Blackberries were registered in Nigeria as of April 2012, giving its operating system the lead over Nokia’s Symbian for the first time. The smartphone market has been somewhat overlooked by Nokia and Apple, but vendors have been making up for lost time since 2011. Already one of RiM’s fastest growing markets worldwide, the market leader established its local subsidiary in 2011. Other vendors like Nokia and Samsung are also aggressively marketing, while Apple licensed its first four authorised retailers in July 2012, two each in Lagos and Abuja, in a bid to expand a market segment long relegated to informal sales only. Apple hopes the Nigerian market share of its iOS platform will reach its global average of 20.5% in coming years.
DEVICES: Sales of lower-end models are increasingly driving smartphone penetration. While the market of 5m consists largely of high-end users, growing sales of “white-box phones” – Chinese-manufactured smartphones with prices as low as $100 – have been expanding, particularly through informal channels. Huawei, the Chinese leader involved in telecoms infrastructure in Nigeria, plans to introduce its first smartphone to the market in 2012. While growth in average revenue per user (ARPU) for data has been lacklustre, competition on data packages and lower entry prices will drive demand for content. Data traffic is picking up, even if the value lags, growing 83% quarterly in Q1 2012 according to BuzzCity, a UK-based mobile advertising firm.
EXPENSIVE TASTES: While still developing, the existing content market remains dominated by music and film, offered as a service by GSM operators in partnership with the likes of DSTV, the South African cable TV operator. MTN’s “Afrinolly” provides video on mobile, carrying mostly local TV and film content. Yet downloads of apps, not limited to games and entertainment, have been growing since 2010 as the elite of smartphone users demonstrate an appetite for expensive apps not evident in developed markets like the US, nor indeed in Africa. Premium apps, sold for more than $10, dominate Nigerians’ top 10 most downloaded apps in Apple’s iStore. This contrasts sharply with the US, for instance, where nine of the 10 most popular apps are free. Very high-end apps have made the top list, with $100 software offering audio preparation for the local certified financial analyst exam the third-most-downloaded app in the iStore in mid-August 2012. Software that allows users to read editions of the Bible such as “Message Bible”, also feature among the most downloaded, an indication of the differences between Northern and Southern Nigerian smartphone usage.
While the high-income niche is enticing for established smartphone vendors, RiM’s BlackBerry and Nokia’s Symbian platforms face growing competition from lower-end Chinese models and South Korea’s Samsung, which run Google’s Android platform. Competition between operating systems will have important repercussions on the app market. Vendors are increasingly harnessing Nigeria’s pool of developers to localise app versions or create entirely new ones, in a Nigerian software ecosystem that will expand their market share.
HOMEGROWN APPS: The overwhelming majority of apps downloaded on all three main platforms are developed outside Nigeria. Within a global app sector, forecast to reach $25bn by 2015 according to the research firm Markets&Markets, there is scope for local capacity. The Institute of Software Practitioners of Nigeria sees the potential for software production worth some $100bn over the long term, and apps will be key to attaining this goal given that mobile devices are the main means by which Nigerians access the internet.
A number of initiatives have emerged to harness local talent. “Nigeria has a thriving and growing mobile software start-up scene with a lot of potential for growth,” Teemu Kiijarvi, head of ecosystem and developer experience at Nokia West Africa, said at the launch of its new Lagos developer centre in May 2012. CoCreation Hub Nigeria (CcHub), established in 2010 by two Nigerians, is an IT incubator providing seed capital to commercialise projects. Concluding partnerships with foreign technology firms, the centre has supported 15 social technology ventures and hopes to turn 30 such ventures profitable by 2014. A popular blog, MobilityNigeria, awards N10,000 ($64) to developers who to share an app for free to incentivise innovation.
A number of apps have already hit the market, although sales remain low. A local media company, Pledge 51, launched a free 1999 Nigerian Constitution app in the run-up to the 2011 presidential election, first on Symbian, then for BlackBerry, Android and iOS. The app was downloaded over 80,000 times in roughly six months. Other more conventional apps are being launched by websites, like car retailer Cheki Nigeria.
HELPING HAND: Local incubation is set to see a boost in 2012 as vendors seek direct ties to programmers. Mobile operator MTN has opened its network platform to third-party applications in 2011 to expand its local content. Nokia announced it will build a software lab in partnership with the Federal Government in April 2012 to create local content and apps with CcHub.
In June Samsung followed suit, signing a similar memorandum of understanding with CcHub to provide expertise, resources and marketing to developers. RiM has been running training courses for over 70 programmers in 2012, in anticipation of the launch of the BlackBerry 10 platform. Structured to be open to third-party apps, the focus is both on localising existing apps, and harnessing new ideas to drive sales worldwide. “The essence of an app developing business is recognising a niche market and matching it with a solution”, Thabiet Allie, head of content and services at Samsung South Africa, said at the June 2012 signing ceremony.
While in its infancy, local app developer capacity has clear potential and with foreign platforms in use, the local talent pool will need to innovate to meet content demands of smartphone users. The need for only low amounts of start-up capital has entrepreneurs scaling up the commercialisation of apps via multiple app stores and competing for both clients and contributors.
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