A number of people have asked me this past week about Vodacom`s yebo!net announcement. Headlines read: "Vodacom aims to grow SA Net market with new venture". CE Allan Knott-Craig is quoted as saying that yebo!net is hoping to capture 20% of the Internet access market by Christmas and 250 000 subscribers by 2000. Is this possible?
Depending on how these goals are defined, Vodacom has embarked upon a somewhat ambitious quest.
Upon deep reflection and contemplation, I think the latter is a remote possibility, as is the 20% market share by Christmas. Depending on how these goals are defined, Vodacom has embarked upon a somewhat ambitious quest.
Currently (according to a reputable source close to the author - BMI-T`s Internet Access Market Analysis and Forecast report), total dial-up subscriber numbers are growing by between 15 000 and 17 000 a month. M-Web alone is reported to be adding 4 000 a month to its customer base, ie about 25% of new subscribers. OK, if that is what is meant by a 20% market share, ie 20% of NEW subscribers, then it surely is possible, given the stated marketing strategy and muscle of Vodacom, its novel packaging and pricing, TV advertising (remember M-Web`s startup) and its extensive cellphone distributor network. As one of its cellular subscribers, we have also received an offer to take advantage of yebo!net`s new Internet services by e-mail.
If, however, the "20% share" was intended to mean 20% of the entire base of dial-up subscribers, I would say "no way", at least not by Christmas. But presumably this is not what was implied. By the way, there are now far more than 160 000 subscribers -- more than double in fact. But we agree that the market is nowhere near saturation, and that innovative providers like Vodacom may pick up new subscribers, by doing things differently and marketing intensively.
How differently is the big question, along with: "To what extent can the existing market be expanded in total, by means of pre-paid packages, subsidised access devices and such like?" There is a big difference between an easy-to-use product like a cellphone and a "knowledge-worker" device such as a PC. There is also a big price difference between a phone and a PC. And the type of technical support required is also much greater - negating some (but not all) of the benefits of using the existing cellphone distributor network.
Could Vodacom`s stated target of 250 000 subscribers be achieved by 2000? We reckon there will be close to 800 000 dial-up subscribers by 2000, before any significant restructuring of the market driven by suppliers (ie totally changing the pricing or greatly subsidising expensive access devices such as PCs). Vodacom would require a 31% market share to achieve this. In terms of new users, Vodacom would require a 58% share between now and 2000 - hardly a likely scenario - or a substantial defection away from the other ISPs. So the answer really boils down to whether a whole new market can be "created" (ie stimulated into existence) by doing something completely different.
There is one way that I believe this could be done and that is by looking beyond PCs to what IDC calls "Internet appliances" - WebTVs, screenphones, PDAs, and last but not least, cellphones. Depending on the application, including the obvious "killer app" - e-mail - we could be seeing much more rapid penetration of Internet access into the emerging "pre-paid" market, particularly using cellphone-cum-PDAs as the access device. And who will not be an e-mail user by 2000?
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