When the Internet consumer market bites back...
Dear Listers, Sorry for the cross-posting and am adding my opinion. There is a story in Business Daily today titled " AccessKenya records 31 p.c. drop in profit " . No matter what way you look at the article, the consumer has spoken. I believe we are now going to see a turning point for kenya's internet pricing. Competition for higher bandwidths at affordable rates is now starting to kick off. The original idea that was used by ISPs whereby after Seacom and Teams landed was to double bandwidth at existing prices was not a good idea and thus must have lead to depressed sales or no new sales. Lack of sales puts a severe financial stress on ISP companies, especially those who took up both under-sea fiber connectivity. In my opinion, I think the market has bitten back! Data Telcos and ISPs are now going to have to go head to head on competition for newer customers. I personally welcome back the competition. :-)
If anybody is interested in the article its available at this link: http://www.businessdailyafrica.com/Company%20Industry/AccessKenya%20records%... Aki, I am totally with you. We as consumers do have some control to what decisions are made in the boardrooms of these corporate companies. The future decisions of AK and similar firms towards price wars is inevitable and the old strategy of "double the bandwidth for the same price" shall not go on for too long if the ISP wants to survive our market. That is my opinion and just that!! Have a great day! Warm regards, Amarjit Singh Labhuram. ====================== MacroTECH Portal Ltd. -------------------------------------------- P.O. Box: 1501 - 00621, Nairobi, KENYA. -------------------------------------------- Zain: +254-735-528725 Safaricom: +254-721-528725 Fax: +254-773-006734 On Tue, Mar 23, 2010 at 7:31 AM, aki <aki275@googlemail.com> wrote:
Dear Listers,
Sorry for the cross-posting and am adding my opinion.
There is a story in Business Daily today titled " AccessKenya records 31 p.c. drop in profit " . No matter what way you look at the article, the consumer has spoken.
I believe we are now going to see a turning point for kenya's internet pricing. Competition for higher bandwidths at affordable rates is now starting to kick off. The original idea that was used by ISPs whereby after Seacom and Teams landed was to double bandwidth at existing prices was not a good idea and thus must have lead to depressed sales or no new sales. Lack of sales puts a severe financial stress on ISP companies, especially those who took up both under-sea fiber connectivity.
In my opinion, I think the market has bitten back! Data Telcos and ISPs are now going to have to go head to head on competition for newer customers. I personally welcome back the competition. :-)
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Personally, I will call it voting with your feet. My 2cents. On 23 March 2010 07:48, Amarjit Labhuram < dj_labu_ft_freakonaleash@yahoo.co.uk> wrote:
If anybody is interested in the article its available at this link:
http://www.businessdailyafrica.com/Company%20Industry/AccessKenya%20records%...
Aki, I am totally with you. We as consumers do have some control to what decisions are made in the boardrooms of these corporate companies. The future decisions of AK and similar firms towards price wars is inevitable and the old strategy of "double the bandwidth for the same price" shall not go on for too long if the ISP wants to survive our market. That is my opinion and just that!!
Have a great day!
Warm regards, Amarjit Singh Labhuram. ====================== MacroTECH Portal Ltd. -------------------------------------------- P.O. Box: 1501 - 00621, Nairobi, KENYA. -------------------------------------------- Zain: +254-735-528725 Safaricom: +254-721-528725 Fax: +254-773-006734
On Tue, Mar 23, 2010 at 7:31 AM, aki <aki275@googlemail.com> wrote:
Dear Listers,
Sorry for the cross-posting and am adding my opinion.
There is a story in Business Daily today titled " AccessKenya records 31 p.c. drop in profit " . No matter what way you look at the article, the consumer has spoken.
I believe we are now going to see a turning point for kenya's internet pricing. Competition for higher bandwidths at affordable rates is now starting to kick off. The original idea that was used by ISPs whereby after Seacom and Teams landed was to double bandwidth at existing prices was not a good idea and thus must have lead to depressed sales or no new sales. Lack of sales puts a severe financial stress on ISP companies, especially those who took up both under-sea fiber connectivity.
In my opinion, I think the market has bitten back! Data Telcos and ISPs are now going to have to go head to head on competition for newer customers. I personally welcome back the competition. :-)
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-- James M. Muendo Timsoft Technologies & Solutions Ltd. P.O Box 28016 - 00200, Nairobi. Mobile: +254725567508 skype:tim.rick http://rickdeesadvantage.blogspot.com/
@James, just adding my amatuer view. I think the story is the first significant admission of losses of a somewhat bad business models. Because AK is listed and we now know the drop in profits could also mean that those Telcos/ISPs whose records are not openly available and followed the models as AK will have similar losses. AK is a strong player in the market, just like others. Just to make a point, you can read the amount of investments going into the local core national networks. There's a lot of movement going on in investments on long term. And then you see names like AK, UUNet and others missing from the core building networks. I think Safaricom is leading, then KDN, Wananchi and JTL. With the common platform license regimes, none of the ISPs are blocked from participating. If AK took a drop of 30%, where would others be? I think the time is near for further price drops with better bandwidth rates. Interestingly, Eassy will have its own impact soon. Either way, they learn from mistakes and turn things around or wait and let next year's profits drop more. The customer base has to grow and rapidly due to all the investments that took place. Rgds. :-) On Tue, Mar 23, 2010 at 9:37 AM, James Muendo <timrick@gmail.com> wrote:
Personally, I will call it voting with your feet.
My 2cents.
Competition has very little to do with this "drop".... Turnover increased to 2B from 1.5B...WiMAX revenue is impressive considering the huge investment made for its rollout...The CAPEX made on the fiber rollout was huge...In 2010 financial year, AK will definitely have an edge over its rivals...Wait and see... ./bernard On Tue, Mar 23, 2010 at 9:57 AM, aki <aki275@googlemail.com> wrote:
@James, just adding my amatuer view. I think the story is the first significant admission of losses of a somewhat bad business models. Because AK is listed and we now know the drop in profits could also mean that those Telcos/ISPs whose records are not openly available and followed the models as AK will have similar losses. AK is a strong player in the market, just like others. Just to make a point, you can read the amount of investments going into the local core national networks. There's a lot of movement going on in investments on long term. And then you see names like AK, UUNet and others missing from the core building networks. I think Safaricom is leading, then KDN, Wananchi and JTL. With the common platform license regimes, none of the ISPs are blocked from participating. If AK took a drop of 30%, where would others be? I think the time is near for further price drops with better bandwidth rates. Interestingly, Eassy will have its own impact soon. Either way, they learn from mistakes and turn things around or wait and let next year's profits drop more. The customer base has to grow and rapidly due to all the investments that took place. Rgds. :-) On Tue, Mar 23, 2010 at 9:37 AM, James Muendo <timrick@gmail.com> wrote:
Personally, I will call it voting with your feet.
My 2cents.
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@Bernard, imho no matter how impressive the investments, services over these need numbers. And those numbers can only be achieved through price drops. If we go back to AK start, the primary reason that they got into the market and especially corporates was because of corporate 1:4 contention ratios over the same bandwidth. At that time, most corporate packages from other ISPs were 1:2. This time around, AK needs to completely move away from double bandwidth/same price models and go back to what made it successful in the first place = cheaper bandwidth. I would also think that some who are on AK only have it as a redundant link and awaiting to exit contracts. That BD article made quite a lot of sense to me, unfortunately I tagged it with a wrong subject line due to time constraints. :-) On Tue, Mar 23, 2010 at 10:54 AM, Bernard Mwagiru <bmwagiru@gmail.com>wrote:
Competition has very little to do with this "drop".... Turnover increased to 2B from 1.5B...WiMAX revenue is impressive considering the huge investment made for its rollout...The CAPEX made on the fiber rollout was huge...In 2010 financial year, AK will definitely have an edge over its rivals...Wait and see...
./bernard
aki wrote:
There is a story in Business Daily today titled " AccessKenya records 31 p.c. drop in profit " . No matter what way you look at the article, the consumer has spoken.
I'm not sure how you read the article, but I think its a "different way" than the way I read it. It is quite clear from the graph in the article that turnover for 2009 have infact increased (by what seems like 1/3), and the article clearly states that it is the investments that have nearly doubled and thereby reduced profitability... So yes I agree that the consumer has spoken, but in favor of AccessKenya ;-) Anyway it will be interesting (as always) to see the public accounts when they are out. regards webMike
I happen to have that info...see attached On Tue, Mar 23, 2010 at 12:09 PM, Michael Pedersen <sku@kaal.dk> wrote:
aki wrote:
There is a story in Business Daily today titled " AccessKenya records 31 p.c. drop in profit " . No matter what way you look at the article, the consumer has spoken.
I'm not sure how you read the article, but I think its a "different way" than the way I read it.
It is quite clear from the graph in the article that turnover for 2009 have infact increased (by what seems like 1/3), and the article clearly states that it is the investments that have nearly doubled and thereby reduced profitability... So yes I agree that the consumer has spoken, but in favor of AccessKenya ;-)
Anyway it will be interesting (as always) to see the public accounts when they are out.
regards webMike
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@webMike, I'll make my last contribution on this thread. There is one line in that article that stands out = “There will be a much higher average bandwidth per consumer as we go ahead. This is what we have to service,” said Mr Senanu. These guys have taken a bitter pill, that double bandwidth/same price. I hope they will be able to do good for the market and as others will through Eassy. Me thots. Rgds. On Tue, Mar 23, 2010 at 12:09 PM, Michael Pedersen <sku@kaal.dk> wrote:
aki wrote:
There is a story in Business Daily today titled " AccessKenya records 31 p.c. drop in profit " . No matter what way you look at the article, the consumer has spoken.
I'm not sure how you read the article, but I think its a "different way" than the way I read it.
It is quite clear from the graph in the article that turnover for 2009 have infact increased (by what seems like 1/3), and the article clearly states that it is the investments that have nearly doubled and thereby reduced profitability... So yes I agree that the consumer has spoken, but in favor of AccessKenya ;-)
Anyway it will be interesting (as always) to see the public accounts when they are out.
regards webMike
@aki: I beg to differ with you on this. Since AK themselves say they will significantly reduce capex on infrastructure in 2010, and given their bullish revenues, it's not difficult to see that this will reap handsome profits for them come the end of the year...even with limited revenue growth in the same period. Unless someone unleashes a market EMP that sends competitors scampering for safety...that's the beauty in volatility that's in ICT :) On Tue, Mar 23, 2010 at 12:30 PM, aki <aki275@googlemail.com> wrote:
@webMike, I'll make my last contribution on this thread. There is one line in that article that stands out = “There will be a much higher average bandwidth per consumer as we go ahead. This is what we have to service,” said Mr Senanu. These guys have taken a bitter pill, that double bandwidth/same price. I hope they will be able to do good for the market and as others will through Eassy.
Me thots.
Rgds.
On Tue, Mar 23, 2010 at 12:09 PM, Michael Pedersen <sku@kaal.dk> wrote:
aki wrote:
There is a story in Business Daily today titled " AccessKenya records 31 p.c. drop in profit " . No matter what way you look at the article, the consumer has spoken.
I'm not sure how you read the article, but I think its a "different way" than the way I read it.
It is quite clear from the graph in the article that turnover for 2009 have infact increased (by what seems like 1/3), and the article clearly states that it is the investments that have nearly doubled and thereby reduced profitability... So yes I agree that the consumer has spoken, but in favor of AccessKenya ;-)
Anyway it will be interesting (as always) to see the public accounts when they are out.
regards webMike
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participants (6)
-
aki -
Amarjit Labhuram -
Bernard Mwagiru -
Haggai Nyang -
James Muendo -
Michael Pedersen