Yebo!net makes its move

After much speculation, the long expected deal has happened. USKO has sold off a substantial portion of its dial-up Internet access business to Yebo!net, effectively providing the Vodacom subsidiary with a meaningful boost in its stated direction.

USKO is proving to be a role model to others seeking to achieve a similar position.

Aggressive moves include talking about free Internet access, following hard on the heels of Yebo!net's innovative packaging and pricing options announced late last year - although it is not yet apparent that this move has had the impact initially anticipated. In a previous column, I speculated that Yebo!net would indeed need to acquire some dial-up subscribers in order to accelerate its ambitious plans!

USKO, in turn, is busy putting together the most impressive range of corporate services in the South African emerging technologies sector. In the process, it is proving to be a role model to others seeking to achieve a similar position.

According to BMI-TechKnowledge (which I also represent), the market for dial-up access services grew faster in 1998 than in all preceding years. Growth took a sharp upward turn at the beginning of the year, and has remained fairly consistent at 16 000 new subscribers a month for most of 1998. (See Figure 1.) Year-on-year growth exceeded 100% to reach 370 000 subscribers.

More significantly, the number of individual Internet users, including those who have access via corporate networks, reached 905 000, of which only 785 000 used the World Wide Web, with the remainder having e-mail only access via corporate networks.

Figure 1
Dial-Up Subscriber Forecast

Interestingly, Internet access within companies is nearly double that of home access. However, this includes users in companies that use the Internet indirectly, eg for e-mail only. For this reason, World Wide Web usage is somewhat more evenly distributed between homes and offices. Overlap between home usage and educational institution access is substantial, and is also eliminated in the calculations.

Assuming aggressive ISP activity, BMI-T forecasts that we will arrive at the 2 million user mark by 2001. Future growth rates depend a lot on what the ISPs decide to do, and how the industry is structured.

Any substantial price adjustments by ISPs in future will certainly accelerate Internet adoption. There is also talk locally and internationally of "free" access. This may become economically viable, when combined with highly focused direct marketing activities. Another trend in the US is leasing of PCs with Internet access for $40 a month, with no long-term commitment.

It also depends a lot on new, low-cost access devices, and how rapidly and cheaply they are introduced into the market. International Data Corporation (IDC) believes this market is poised for explosive growth in the next four years. The lion's share of the information appliance momentum has moved toward netTV, gaming devices and smart handhelds, according to IDC. The latter shows the greatest promise for deployment on an absolute unit shipment basis.

This includes cell phones, which in future will provide almost universal connectivity for applications such as online banking and ticketing. There are already about 2.6 million cellular subscribers, and there will also be a growing base of users accessing Internet-based applications using public information terminals and kiosks. The latest kiosk project has been announced by I-Kiosk Internet and Information, a company that will roll-out Internet access to 250 libraries this year, and ultimately to the whole lot.

Figure 2
Total Active Internet Users, South Africa, 1996 - 2002

One of the favorite topics people like to wax eloquent on is that of market research statistics - especially Internet and e-commerce statistics. Of course, what most people tend to miss is the really important issue of "so what?" - but more on this later. Needless to say, the numbers do attract a lot of attention, and make great marketing hype.

This fact has not been lost on the various research companies, both locally and abroad. So much so that Fortune magazine recently ran an article on the various research companies internationally, and how they position themselves in this space.

The title of the article was appropriate: "[Grandma], what big numbers you have!" Various subtle and not-so-subtle accusations were levelled, particularly at those companies that do a quick sample of leading adopters of a particular technology, and then try to base the whole universe upon the results. This can be very misleading, if not downright deceitful, they maintain.

Being part of a leading research company myself, it was gratifying to see IDC coming out of the melee as just about the only company with a truly research-based approach to the issue. The company's whole approach is based on "huge user surveys" on a global basis, followed by intensive data analysis and modelling. BMI-T, which represents IDC locally, follows the same methodologies, including the large body of primary research, consisting of thousands of user interviews every year, among both consumers and organisations of all sizes and descriptions.

BMI-T also uses IDC's world-class data modelling techniques. I am personally proud to be the custodian of the IDC model, which is incredibly detailed and sophisticated, consisting of more than 50 000 data elements, with analyses based on local primary research in each region. In fact, IDC's global survey covers 40 000 interview across 20 different countries.

It is thus with some amusement that I read a recent comment that BMI-T's numbers are "an extrapolation of IDC's international numbers". Nothing could be further from the truth, although BMI-T does take considerable pride in using best of breed global methodologies. Equally amusing is the assertion that BMI-T left out the educational establishments in its analysis.

Anyone can add up ISP dial-up subscriber numbers and arrive at the same figure. In fact, BMI-T tracked this data quarterly during 1998, and determined the total subscriber base and monthly growth rate no less than three times that year. What is ludicrous, however, is to simply multiply this number by three as a rule of thumb to get an estimate of the total number of Internet users in a particular country, in the absence of supporting user survey data. You may think this does not happen, but in fact it does. I read about it on none other than that highly useful Web site belonging to Nua - in which this very method is described as being part of the research methodology.

Enough of the boasting. (I need not have, it just seemed so opportune while in the process of defending my company's honour!) The real question after all is said and done is: "So what?" Will e-commerce be a measurable commodity in the distant future? Won't electronic networks one day, one way or another facilitate all commerce? And what should we do about it now?

"We hear about all the hype (including the big numbers), but what will the impact be on our business?" "How will it affect the way companies in our industry compete in future?" "While knowing that we need to do something; what and how remains unclear." These are the really important questions, and having raised them, I am going to do the good old serial story thing and leave them for another day's debate.

Please feel free to e-mail me on brian@bmi-t.co.za if you want to get the ball rolling on this topic (or alternatively if you want to take me up on the numbers debate).