Feeling pressure, Africa's largest social network looks to expand

With increasing competition from abroad, Africa's largest social network is trying to stay relevant on the continent, with hopes of expanding around the globe.
Written by Dave Mayers, Correspondent, Johannesburg

For a mobile social network, MXit (pronounced "mix it") is relatively large. Even with over 55 million registered users, most people outside of South Africa have never heard of it. With increasing competition from abroad, Africa's largest social network is trying to diversify and innovate to stay relevant on the continent, with hopes of expanding into emerging markets around the globe.

South African-based MXit was founded in 2003 by Herman Heunis, originally just as a series of mobile chat rooms. People sent messages to each other for fractions of a cent, usually bypassing traditional text messages.

Despite the simple concept behind MXit, it's caught fire in South Africa, especially in poorer communities. Ten million South Africans regularly use the service, almost double the number of Facebook users here.  There are between 40,000-50,000 new registrations daily.

A growing number of these new users are now located outside of South Africa--one in five are from abroad. In all, MXit users from 126 countries around the globe send between 500 million to 800 million messages a day.

MXit has found a huge following in emerging markets. Its largest advantage over other social networks in the developing world is that users can log on with almost any mobile device. For the most part, Facebook and Twitter require the use of a smartphone or a computer to do even mundane tasks, leaving both services out of the reach of many.

Last year former MXit CEO Alan Knot-Craig Jr. explained to the Mail & Guardian the advantage MXit has in many of these markets:

"Eighty percent of phones sold in the world are not smartphones," [Former MXit CEO Alan] Knott-Craig said. "These are the ones we are aiming at. This is where the volumes are. We are essentially targeting seven out of the eight billion people in the world, many of whom do not have credit cards or bank accounts, only cellphones."

The service is already popular throughout Southern Africa and Indonesia, with plans to expand into India and South America.

Still, MXit is feeling pressure from overseas competition and a negative perception of its users from advertisers. Its biggest strength is also one of its main weaknesses. Many companies don't see MXit as home to a sought after audience. Only one out of five large South African  brands uses the service to market their products. Nearly nine out of 10 local brands use Facebook to advertise to the South African market.

Earlier in the month, MXit acquired R100 million ($11.5 million) from shareholders to expand its business and aim for users outside of its core group. This comes on the heels of the company striking up new partnerships to find different ways to use the application.

In August, MXit and local giant Standard Bank announced that they would be working together on a mobile money service similar to Kenya's popular M-Pesa. Another South African company, RLabs, partnered with MXit to connect local job seekers with headhunters. The service has already drawn 100,000 users.

These changes have also heralded a shakeup in management of the company.  Former CEO Knot-Craig Jr. stepped down as head of MXit with rumors that the company was looking for a more "structured" leader. In his resignation letter, Knot-Craig Jr. seemed positive with his outlook on the company's future:

"While the shareholders and I share the same vision, we differ on how to get there. Therefore, I agreed to go my own way. I wish them all the best for the future. Mxit is Africa's biggest tech success story, and can be a global success story."

This post was originally published on Smartplanet.com

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