State can spur growth of tech firms and innovation

Business model innovation is becoming increasingly important as we look at addressing real world needs using technology.

We have in the recent past seen discussions, both online and offline, about how government can play a better role in creating a conducive atmosphere for local technology companies to prosper.

This call for the government to rethink how it conducts its business when seeking solutions is not without its counter arguments — the strongest being that the local tech sector cannot cry for protection while wanting to compete in the global market place.

Technology ecosystem consists of different players but my desire is that we become net producers of exportable value.

This is the only way that information technology will match and even surpass agriculture and tourism as the highest revenue earner for the economy.

To drive this home, an example will suffice. The concept of co-government investing will look like one of those very obvious things, once its broken down.

Kenya has very real challenges that can be addressed using technology.

Africa has those same needs amplified by many factors.

This reads as an opportunity for us to build Kenya as the hub of innovation in Africa.

Pick a problem with a government component, say the Horticulture Crops Development Authority wants to deploy a system to better manage the farm to ensure alignment with new rules and regulations in export market.

In the current frame of mind, they would put out a tender and possibly make it international.

A foreign firm may get the deal, sit for months developing the platform, deliver on time, on budget and then leave.

Well apart from obvious capital flight, here is how it would work out differently.

The authority would do a local tender and engage the winning bidder within a commercial entity set up to develop the platform.

They would pay for the development but the intellectual property remains with the entity.

With the needs of the authority met, the entity would now look to export the solution to other markets with similar challenges, making them net exporters of technology and generate revenue.

What this does for the local tech firm is that it grows their portfolio and makes them even more attractive for venture capital investment whose caretakers are a rather picky lot.

The tech firm could eventually buy out HCDA in the entity and leave in its wake a local technology firm with an African footprint, revenues to support continued research and development and a war chest to spearhead entry to other global markets.

Public Private Partnerships are a great way to kick off the co-investing concept.

By MBUGUA NJIHIA

Tablet computers still out of reach for most Kenyans despite hype

Only one per cent of Kenyans own tablet computers — an indication that the latest gadgets in the field of consumer technology are still beyond the reach of the country's majority.

According to recent statistics from research firm TNS RMS East Africa, despite the availability of most of global leading brands in the country, 99 per cent of Kenyans are unable to access tablet computers while 95 per cent say they do not plan to buy them.

The findings that come barely a week after Apple launched its latest edition of the much-awaited new iPad in North American and Europe presents a marketing concern to vendors of tablet computers in the country who have been relying on the growing popularity of the gadgets to boost sales.

Despite the hype, however, tablets are still considered by many as a reserve of the tech savvy elite in society, with many believing that they are more of icons of stature, than a portable computing necessity.

Tablets made their debut in the Kenyan market in mid-2010 with Apple's iPad 1 leading the onslaught.

Since then, tablet-makers have scrambled to make inroads into the niche market segment even as new models roll off the conveyor belt each fortnight.

According to John Makenga, head of sales at Elite Technologies, a computer shop in Nairobi's central business district, most buyers of tablets fit a particular well-heeled user profile.

"Most of our orders come from corporate clients both in the government and the private sector," he said.

"We also have walk-ins and these are people who have had prior exposure to tablets either through ads or through handling the devices from a friend or at work."

"Such buyers know what they want to buy and how much it costs and will directly ask for an iPad2 or a Samsung Galaxy without asking many questions about the price or specifications".

Mr Makenga, however, said it is not correct to compare the adoption of tablet computers in developing markets to their sale in more advanced economies where penetration rates are above 65 per cent.

"Consumers in developing markets have leaner budgets and long priority lists and tablets come low in the list especially if the user already has a desktop computer or laptop," he says.

"A lot of my customers inquire about the devices and seem to want to make a purchase but confess that the price is a deal-breaker," he said.

"Most of them are thus adopting a wait-and-see attitude in the hope that the prices will come down with the release of new models".

He is supported by the TNS findings in regards to the adoption and acquisition of mobile handsets.

According to the findings, despite having higher GDP/capita, Kenyans expect to pay less for their next phone as compared to Tanzanians.

In addition to this, Kenyans also replace their handsets more quickly and utilise the features in their high end phones.

The findings further go on to state that upgrades in Kenya happen faster and although the price point is lower, phones have better capabilities and there is a higher smartphone penetration.

The slow uptake of tablets in the Kenyan market further mirrors the adoption of e-readers which is still relatively slow.

This has been largely attributed to the fact that most of the reading material in the country is yet to be digitised.

There is no incentive to purchase the e-readers due to a shortage of local content.

But the country still remains in the top seven adapters of the device in Africa together with South Africa, Namibia, Botswana, Gabon, Nigeria and Ghana.

In these countries, widespread 3G network and GPRS have led to an early adoption of e-readers compared to other African countries.

In Kenya, e-readers have been popularised by non-governmental organisations which distribute e-books to rural schools to promote technology-aided learning.

One of these organisations is Worldreader which has distributed 500 e-readers to rural schools around the country in partnership with other players in the book publishing and education sectors.

The early results of the project dubbed "One Kindle Per Child" has seen children spending up to 50 per cent more time reading than before the introduction of e-readers, and fluency scores in the exercise increasing quickly.

Price drop

With increased digitisation of primary and secondary school syllabi, the uptake of e-readers is bound to increase as the demand from teachers and students increases.

For users of tablet computers, however, it will be some time before they can see a significant drop in prices to enable more of the middle class to obtain the high end toys.

But for those who desire to have the latest iPad ahead of their peers, they should be prepared to pay the price of being the top one per cent.

The new iPad costs between $499 for the 16GB model and $699 for the 64 GB one.

The prices can go to as high as $829 for some models that have both wi-fi and 4G capabilities.

By FRANKLINE SUNDAY

VoiP technology eats into Telkom Kenya’s fixed line call traffic

The use of Voice over Internet (VoiP) technologies such as Skype and Google is eating into Telkom Kenya's fixed line international call traffic.

A report by industry regulator, Communications Commission of Kenya (CCK), indicates that international traffic on fixed lines has been on a decline, particularly after the vicious price wars triggered by Zain in August 2010 that saw calling rates come down by more than 50 per cent.

International outgoing and incoming traffic through fixed lines dropped by 22 per cent to 11.45 million minutes and 17 per cent to 31.86 million minutes respectively between July 2010 and June last year. But traffic to mobile networks shot up by 91 per cent to 59.3 million minutes.

"The decline could be attributed to a decline in consumers' ability to pay for fixed international telephone calls.

It could also be ascribed to reduced mobile international voice calling charges and other competing alternatives such as Skype, Gizmo, and Google talk as well as video and instant messaging," CCK's report says.

Skype allows a user to communicate with another online using voice-over-internet technology at a very low cost and at times for free.

The users must set up an account and receive an online Skype number.

The users are even able to see each other as they communicate.

The low cost of calling using mobile phones has in the past been the biggest competition to fixed lines, but now other technologies are eating into international voice revenues that the fixed lines used to provide, threatening the old technology even further.

The price war between the four mobile phone operators; Airtel, Safaricom, Yu, and Orange which is owned by Telkom Kenya, has seen international calling rates drop to a low of Sh3 per minute from a high of Sh10.

While the low prices have played a big part in driving international traffic from fixed lines, cheaper online technologies have also seen the need to call abroad on fixed lines fall.

CCK's report, for the period ended June last year, also notes that the total number of fixed line connections in the country declined to 379,201 from 460,114 in June the previous year. This further dropped by 28,167 to 351,134 lines in September.

Increased competition

The communications regulator attributed the reduction in fixed line services to increased competition from mobile service providers, the high cost of maintaining fixed lines, and the Internet.

The Internet has emerged as a threat to fixed lines, a sharp contrast from the days of Kenya Power and Telecommunication Company's dominance when fixed lines were the only ones in use.

In an earlier report, CCK said that mobile phone connections between June 2000 and June 2001 shot up from 20,000 to 334,146, surpassing the number of fixed lines at that time which stood at 321,482.

The regulator also started issuing licenses to Internet service providers whose number stood at 23 in 2000 though the Internet, which used satellite technology, was too slow and could not support the kind of applications that are in use today.

However, with the country having put in place three sub-marine fibre optic cables; The East African Marine System (TEAMS), the East African Sub-marine Cable System (EASSy), and the Sea Submarine Communications (SEACOM), Internet speeds have shot up making it easier for clients to use more sophisticated technology.

Kenya continues to witness a vibrant telecommunication sector with the number of mobile subscribers as well as those with access to Internet services growing phenomenally.

Internet use

According to CCK, the number of Internet users increased from 12.53 million in July 2011 to 14.3 million users in September.

"Internet user reached 14.3 million, meaning that 36.3 per cent of the country's total population has access to the Internet," the regulator said in its report on the sector's performance between July and September 2011.

The total number of subscriptions during the period also rose by 27.5 per cent to 5.42 million.

"The period under review witnessed 75 per cent of the total users accessing the service through their mobile handsets, leaving computer and other modes of access with only 25 per cent," the quarterly report says.

By DAVID MUGWE