Safaricom Big box 0 -1 Market forces 😉 The score could be greater if we consider other products that dissapered as fast as they were launched
Safaricom was betting on the demand created by the migration of analogue TV broadcasting to digital platform to drive sales of the decoder Big Box. Out of the 3.2 million households that have access to digital television, safaricom was targeting on an estimated 2.4 million who are not using any of the set top boxes in the market,but,only recorded 1500 subscribers in three months before the suspension.
According to safaricom (CEO) the suspensions of the sale of Internet-enabled digital TV decoders is to allow for software upgrade after realizing that the Wi-Fi software in the decoders was not strong enough to support indoor Internet access. Which they intend to resolve in the next release by end of September. (Note: they are already 6 day off schedule). This is great PR to mask what was an impeding crush of the BigBox that was perfectly predicted as soon as it launched.
So,What could have went wrong?
1. Is Safaricom spreading itself too thin?
The pay TV industry was a good investment with a ready and sustainable market size, but it seems Safaricom want to take on anything that that comes their way, from Pay TV to Government CCTV projects to Rent collection services to KCB-Mpesa (isn’t that counter productive to Mshwari). While some of these might have worked with their current resources, some just needs a better understanding of the market and execution, which Safaricom doesn’t always have. Frankly, If they want a piece of the digital broadcast, the best approach is to either partner with an existing player or register a totally separate outfit as they remain focused on its core business of mobile telephony and money transfer.
2. No clear value proposition
The Big box was too vague on its differentiating factor despite the high pricing.It is fair to say that Wananchi with their Zuku fiber-optic cable have the home internet service segment figured out, they are however, too slow to expand their coverage. One would assume that Safaricom would take advantage of their presence and network to offer a decent service, but no, it has to be the most ridiculously priced and unreliable home broadband service this side of the moon.
3. Insufficient Research &Development
The best companies in the world spend an arm and a leg on research and development before shipping products and services to market. According to a report from Strategy&, the top ten biggest R&D spenders in the world allocate an average of 10% of their annual revenue to Research and Development. For example, Samsung spent $13.4B in 2013 which represented 6% of their revenue. Microsoft spent $10.4B, which is 13.4% their 2013 revenues.
While we don’t have numbers on what Safaricom spends on R&D its clear that whatever decision that led to the Big box was poorly arrived at. As a passionate CEO, Bob should have used the Big Box for months before rolling it out in the market and see all the improvements that are needed. Thus, this has turned out to be a disappointment in what is a classic hurry to launch before enough research- an armature move if you ask me!
I heard someone say that they would personally like to sit down and have an intense chat with those 1,500 good people who sunk their hand in their pockets to whip out Kshs. 10,000/- for that gadget. Which is not a bad idea for Safaricom to follow.