Orange’s decision to partner with Google to provide Google’s Gmail SMS Chat to the subscribers of its operating companies in the Middle East and Africa is an acknowledgement by both parties that those who live in emerging markets are just as interested in accessing Internet services as those who live in developed markets. By enabling Gmail Chat via SMS, Orange and Google are also acknowledging that SMS is a key delivery channel for internet services in emerging markets, where there is low penetration of internet-enabled PCs and of internet-enabled mobile devices.
Orange states that only 1.4 per cent of the population in Africa and the Middle East has access to broadband services, and Informa Telecoms & Media forecasts that the penetration of smart-phones in Africa and the Middle East by end-2011 will be just 11.3 per cent and 19.8 per cent, respectively. According to Informa, there were 577.6 million mobile subscribers in Africa and another 226 million mobile subscribers in the Middle East at end-2Q11, equating to penetration rates of 54.7 per cent and 93.5 per cent, respectively. In order for an Internet company to reach the widest possible audience in Africa and, to a lesser extent the Middle East, it’s going to be essential for that company to use SMS as the access mechanism.
The partnership delivers mutual benefit to Orange and Google: Orange will generate additional traffic and revenues from the SMSes sent by those of its subscribers who use the Gmail SMS Chat service and by those of its customers who reply to the chat messages.
Meanwhile, Google will secure additional market reach. The Internet company already offers Gmail SMS Chat via 29 other mobile operators in Africa and the Middle East, but the tie-up with Orange gives it access to another 19 networks, representing 60 million subscribers in total. At a micro level, Gmail SMS Chat users will be able to add Orange mobile customers who are not Gmail SMS Chat users to their address books/buddy lists, which may in turn encourage non-users to sign up for the service themselves.
It’s also possible that Orange and Google will co-brand and/or co-market the service, which will again deliver benefits to both companies in terms of raising or enhancing their brand awareness among mobile subscribers in the MEA region.
Orange and Google have not disclosed the commercial terms of the partnership, but it’s unlikely that Orange will share messaging revenues with Google. However, Orange is offering Google the opportunity to provide other services to its subscribers, and Google may well be able to charge for these or secure a share of the revenues generated by these services.
Orange and Google have already had some success with Gmail SMS Chat: Orange stated that the service attracted 700,000 unique users in Senegal within the first six months of its launch in Jul. 2010. Between them, these users sent four million Gmail SMS Chat messages.
It is possible that Gmail SMS Chat can achieve a similar level of success in the other African countries in which Orange and Google propose to introduce the service, which is also already available in Kenya and Uganda. Initially the operator has only named five other markets in which it will launch or trial Gmail SMS Chat, though it expects to roll the service out across all 19 opcos.
Orange is not charging its subscribers a subscription fee to access Gmail SMS Chat, nor will it place a premium on the SMS chat messages, which will help to make the service more attractive to consumers. In fact, to provide even more incentive, Gmail SMS Chat users receive a quota of free SMSes (Google states on its web site that Gmail SMS Chat users receive an initial quota of 50 messages), which is renewed with an additional five free SMS messages every time an Orange customer makes a paid-for reply to a chat message.
However, Orange and Google are not alone in seeking to provide SMS-enabled Internet services to mobile subscribers in Africa; companies such as ForgetMeNot have been doing so for a couple of years. ForgetMeNot, for instance, enables SMS-based e-mail, instant messaging and social networking for operators in Kenya, the Republic of Congo, Zimbabwe, Lesotho and Nigeria. Although such companies do not have the scale of Orange and Google, they are agnostic in terms of the services that they do enable, which can be a potential differentiator for mobile operators.
With Amazon and Google launching smart home initiatives, have the telcos missed out on their chance to cash in on this market?
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