One of the challenges that affect every internet based or internet centric company in South Africa is the lack of penetration of the internet market by the majority of South Africans.
All great forms of mass communication – first newspapers, followed by radio, then the television and now the internet – have to be properly priced in order to reach the masses. This is especially true in South Africa, where a large percentage of the population live in poverty and have very little disposable income.
When technologies and new forms of communication are created, they are generally expensive and only available to a select few, but over time, the price of accessing this new technology decreases due to the effects of economics of scale. As more and more people access the new form of technology so its price decreases.
This observation holds true with the internet: many of the richer European/North American and Asian economies have mass exposure to the internet, allowing a greater audience to access the features of internet-based companies, enabling said companies to generate wealth in a far more productive manner.
In South Africa, the internet and the possibilities it enables are only now truly entering the marketplace; the economics of scale have only begun to take effect in the last few years, especially with the growth of mobile connectivity.
While it is true that South African internet companies are mostly connected and available to the middle and upper income classes, this is changing as more and more people access a cheapening form of communication.
And here lies the opportunity for internet based business in South Africa. One can look at the glass and see it as being half empty. But a change in mindset can enable companies to see a more positive side: South Africa has a lower internet penetration than other countries which means first world internet companies work in a far more cut throat environment due to the internet industry already being established.
This is not true in South Africa. The companies that NOW place themselves as the forerunners in their business niches in the local internet community will be able to reap their rewards in a few years’ time if they adapt their internet business models to the needs of the masses.
In such a way, NetDynamix has positioned itself as one of the leaders in online audio streaming, developing software and hardware that meet their clients’ needs as well as providing services to their clients that are flexible enough to solve the changing and disparate challenges multiple different companies have.
Just as Google, Microsoft and Apple were well positioned in industrialised nations at the turn of the 21st century to tap into a growing internet community and to adapt to the needs of that community in such a way as to maximise their profits, so local companies must be at the forefront of what the average consumer in South Africa needs in such a way so that their company becomes a known brand in the local online community, just as Google, Microsoft and Apple are household names today in a global sense.
Yes, it is true that South Africa has a lower percentage of internet users compared to much of the first world, but we are still far ahead of any other African country and this is the key to future success. By establishing oneself as a key player in both the local and African market, future profits can be plentiful if your business models are adapted to cater to the projected large increase in internet usage in both Africa and South Africa by lower LSM’s as the technology around internet connection becomes more accessible and cheaper.
Chris Grant is CEO of NetDynamix.