29 November 2013

Nigeria: A Nice Mobile Music and Video Service With a Handset Attached - Solo Launches in Nigeria and Turns the Business Model On Its Head

London — Another made in China African handset launch would be deeply uninteresting. But the unveiling of Solo's new handset bundled with data and content in Nigeria somehow turns the business model on its head. If you want people to use data, then you've you've got to offer them things they want. Russell Southwood talks to Solo's Michael Akindele about how it wants to re-invent the market.

Solo's CEO Tayo Ogundipe worked as a Nigerian for a number of the global big names in the USA and Taiwan: HTC, Sony Ericsson and Ubiquitel. But that by itself is not what makes the Solo launch interesting. For as Akindele says:"It's not just a device. We've looked at the local market and are trying to create a new market."

There are two handsets and each come with its own distinctive content bundle. The cheaper of the two devices is the S350, an Android Jelly Bean 4.1 smartphone with a 3.5" screen and dual SIM capabilities. It comes with a music service that offers the user access to 20 million songs for the life of the device. It sells for N18,500, the equivalent of US$115.

This music service has been put together by a music partner who has rights cleared access to the catalogues of the majors like Sony, Universal and Warner. But is will also include music from local Nigerian labels, South African music and African music from elsewhere on the continent.

Given the levels of piracy on the continent, the rights holder have, according to Akindele, been content to accept a licence fee per device on the basis that they get some money rather than nothing. If the targeted sales figures mentioned later come to pass, this could well be a significant sum.

The more expensive of the two phones is the S450, and Android Jelly Bean 4.2 smartphone with a 4.5" screen and dual SIM capabilities with greater memory than the cheaper model. It will retail for N29,500, the equivalent of US$183. It comes with the same music service as the cheaper model but its users have access to a premium film and TV service.

Solo is deploying 50 hotspots around Lagos and will scale that to 300-500 in 3-6 months. There will be kiosks where customers will be able to download a film to their phone in 3-6 minutes. The Kiosk will have a touch screen interface and offer free access to things like trailers and posters. The content offered will be Nollywood and international films and TV series. For the former, Solo has signed a deal with iROKO to licence its catalogue. Content is erased from the phone after 2 weeks.

The video content will have multiple price points ranging from US50 cents to US$10: the more premium, the higher the cost. On payment, it will offer multiple payment "from SMS to cards and including our own parallel monetization platform, the Solo Card, a mobile wallet solution."

In terms of operators, Solo started with Nigeria's data friendly operator Etisalat who agreed they would give free bundled data of 100 Mbs per month. Two weeks before the launch Airtel came on board and topped that offer by offering 500 MBs. MTN is now in discussion and may join before too long. It has compressed the music stream from 384 kbps to 64 kbps so those who are listening to music get a certain amount completely free. But it's clear that the operators are baiting the offer to try and hook users in to regular use that they pay for.

Solo is ambitious in content terms and is looking to explore other content bundles in topics like health.

Predicting likely sales is hard but Akindele draws comparisons with other OEMs who have managed to sell 120,000 devices in a month. In what he believes could turn out to be a conservative figure, sales by year 3 are predicted to be 2 million.

The current roll-out is self-funded by the Solo team but it says it will be closing a Series A round before too long. There are also plans to roll out the concept across the continent.

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