By Nnamdi Odumody

The beautiful game of soccer is one which entertains fans who pay to go and see their favorite stars showcase their talents. At the 1986 FIFA World Cup, hosted by Mexico, a young Diego Armando Maradona, the Argentine captain and playmaker, took the whole world by surprise, against England, when he dribbled past several opposition players to score a goal which was acclaimed as the best goal scored in the tournament, and consequently a man of the match performance. His statue was built at the stadium where he achieved that feat as the greatest footballer in the world then.

Ronaldo Luis Nazario, the legendary Brazilian striker scored a first half hat trick against Manchester United in the UEFA Champions League at Old Trafford, United’s home ground. He was applauded by the opposition fans for an extraordinary performance. In the 2004 2005 season La Liga El Clasico (match between FC Barcelona and Real Madrid), Ronaldinho scored two goals and showcased skills which till this date hasn’t been matched by any footballer in a 3-0 victory which earned him an applause by Real Madrid fans.

Cristiano Ronaldo in the 2017|2018 UEFA Champions League quarterfinal match against Juventus, scored two goals, one an overhead kick that was adjudged the best goal of the competition, and earned an applause from the opposition fans which played a major part in his decision to move to Juventus after nine trophy laden seasons at Real Madrid. In the current Champions League season, he has also scored a hat trick against Atletico Madrid in the UEFA Champions League knockout return leg, at home, after trailing 2-0 away to make his team qualify for the quarterfinals which made Diego Maradona, the Argentine soccer legend, to call him a wizard.

Lionel Messi, considered to be the greatest footballer of all time, due to his constant showcase of magical moments in football matches over the past 10 seasons, scored a wonder-goal never done before in his La Liga hat trick against Real Betis at their homeground, earning him an applause from the opposition fans and football lovers across the globe stating that he isn’t human, and probably the best football has ever seen.

All these legends delivered extraordinary performances beyond the expectation of their fans and opposition fans in crucial matches which earned them plaudits. As an intrapreneur, always strive to deliver extraordinary products and services to your company’s clientele beyond the expectations of your bosses and the customers themselves. Steve Jobs said that Apple doesn’t need to ask its customers what would they want it to produce for them, but will always deliver products that would be beyond their expectations.  That philosophy is the secret behind the success of the game changing products from Apple’s stable: iPod, iTunes, Mac Book, iPhone, iPad, etc.

Steve Jobs, Apple Founder, was legendary for stimulating demand. He worked without surveys or focus groups. He was a genius, peerless in his generation. He saw an unborn future many years ago. He was an icon, who changed his world. He developed a good design paradigm of working at the perception of customers, beyond their needs and expectations. He found glory and Apple triumphed with iPod, iPhone, iPad and more.

When Elon Musk produced the first Tesla, he knew that due to climate change, electric vehicles were the automotive solutions for the future and worked on it till it became a success and reality. Today, all automotive manufacturers worldwide are shifting to electric vehicle production. Entrepreneurs should always deliver extraordinary and exceptional products which will surprise their customers beyond their expectations to the points of their perceptions.

Steve Jobs’ Perception Demand Construct, for Africa

Among leading Nigerian cloud players like MTN Cloud, RackCentre, Vodacom, and MainOne, the first to offer cloud gaming at scale will have the most important killer app in the industry. That app will seed profitable activity, pump bandwidth and accelerate value for the capital intensive business. Think of Netflix of African gaming! Previously, I made the case that cloud providers in Nigeria should invest in building amalgam of primitives, flavored for the Nigerian economy, for developers. The primitives must capture cloud gaming if they hope to thrive. Largely, the typical business processes from finance and back-office processing cannot deliver activity volume to make cloud business profitable in Nigeria as global players like Google, Microsoft and Amazon arrive. I described many of the challenges here, and those remain.

MainOne, MTN Cloud and RackCenter should invest efforts to build critical building blocks of computing elements, the primitives, in their data center businesses with specific focus on Nigeria and Africa. This will help them attract developers/partners to expand their operations. The promise is economies of scale through higher adoption of their platforms. As this adoption happens, these companies can enjoy massive “tax” which is simply collection of fees imposed on companies that depend on their platforms. Africa-themed primitives like procurement primitives, anti-corruption primitives, etc will be enablers for this differentiation in the market.

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I think the cloud businesses here are largely IaaS and for keeping your platform connected to the internet, nothing much in terms of resources, which is actually where the global giants differentiate themselves. What exactly is the difference between RackCentre and MainOne cloud services for a developer? All of them look the same, other than different names with minor services to clients, but for developers, not much.

It is not every kind of business you copy, without improving on it, and somehow believe that everyone will be queuing up for your services.

The Challenge before MainOne and Rack Centre

It is evidently clear – the future of entertainment is online. Typically, technology-fueled behavioral trajectories begin in developed economies [they are always invented therein], and then ripple to developing ones. The penetration latency is always less than half a dozen years for most consumer categories. So, the report from Deloitte that for the first time, more people pay for online streaming service than subscribe to traditional pay TV, in U.S., is a big deal. From the report, 69% of consumers pay for Internet video versus 65% for cable or satellite TV. In total, 43% of all U.S. consumers do the combo – subscribe to both pay TV and Internet video. People who pay for online video typically subscribe to three streaming services, based on Fortune summary.

Cord cutting, or people dropping their cable or satellite TV in favor of online video alternatives like Netflix, has reached a critical milestone. For the first time, more people pay for a streaming service than subscribe to traditional pay TV, a new survey has found.

Sixty-nine percent of consumers pay for Internet video versus 65% for cable or satellite television, according to consulting firm Deloitte, which published the report on Tuesday. The proportion of people paying for Internet video has skyrocketed while the proportion on traditional pay TV has dipped in recent years. Just 10% of consumers streamed in 2009, rising to 55% last year. Pay TV subscriptions hovered above 75% for years, but Deloitte said they changed how the question was asked since last year’s survey.

As this inflection point arrives in key DStv African markets, it will have to do real battle to thrive. Do not expect it to be easy because the winner in this game will be a company that delivers the best product at the lowest possible cost. Yes, scale matters and winner-takes-all applies here. So, Netflix is a major threat in the horizon and that is why DStv is making noise and weeping when necessary for help from regulators in Africa. Of course, DStv is also transitioning online because it knows that when broadband price drops, most will receive their entertainment needs via the web.

The problem MultiChoice is facing today with the loss of subscribers is not really about Netflix. Simply, MultiChoice knew that the trajectory of entertainment was moving online and will continue to do so. Online is going to become the equilibrium state of “view entertainment”. Yet, MultiChoice did nothing. It is typical; I called it the monopoly hangover when I wrote about Interswitch. These entities are making so much money in the present model to creatively destroy it. Typically, someone else has to do it for them as that is the only way they can wake up.

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For the incumbents like DSTv, the major challenge at the beginning of potential disruption of their business usually hovers between ignorance and defiance, especially when the current model is bringing huge revenue.

The old mantra of “when isn’t broke, don’t fix” has remained engrained in their mentalities, so the inertia is real. It has now become clear that in the era of knowledge economy you can actually begin fixing, before it breaks; because these days business models don’t just break, they collapse!

DSTv has big advantage over Netflix in terms of winning markets across Africa on streaming services, just by leveraging on its customer base and transitioning them ‘seamlessly’, but it requires a lot of spending and willingness to fix what may not be technically broken at the moment.

What brought you success in the past may not be enough to guarantee your relevance going forward, herein lies the real hangover.

When Naspers’ MutiChoice (DStv, GOtv) Weeps Over Netflix

Date: 1997.

Let’s assume you are a consultant helping a small American bookstore on strategy. The store has $10,000 it wants to invest on expanding its bookstore.

But at the same time, a startup is going public. That firm is named Amazon.

You have two options:

• Put that $10,000 on Amazon shares
• Invest the $10,000 to expand the bookstore

What will you do?

Date – 2018

A $100 invested in Amazon in 1997 would be $120,000 as of 2018. So, the $10k for option #1 would have brought in $12 million for the bookstore if it abandoned the whole idea of running a shop.

The second option would have been bankruptcy since bookstores in most American cities are only available in museums. Yes, he fought but Amazon was too much!

Commentary

This insight came to mind when I visited a big mall in Pennsylvania USA yesterday. This is the picture of a mall that used to host thousands of cars on a weekend [you can see JC Penney there]. It was unbelievable how Amazon has dislocated the mall system – they even turned off the traffic lights because the limited cars coming to showrooms have no need for same.

Yes, the malls are showrooms – you want to buy a refrigerator in Amazon but you want to feel it physically in JC Penney before you click submit in Amazon.

A huge lesson as AI begins its journey into markets and industrial sectors: it may make sense, in some cases, to just save that money and put it in entities that make sense over trying to fight for fighting sake. May your antenna be alert to know when dislocations are happening to avoid taking the second option!

Last year, we told a real estate firm in South Africa to redesign its new mall plan to make it possible, in deep future, to serve as a residential estate in case ecommerce causes paralysis in South Africa. So, the new mall has an element that if malls business begins to crash, the properties can be easily retrofitted into a residential estate.

 By Nnamdi Odumody

As part of the reforms aimed at opening up the Chinese economy, a free trade port is being established at the Shanghai Free Trade Zone. A Free Trade Port is a port that capital, goods and people can enter and exit freely within a national territory and is exempt from custom duties and taxes.

In the Free Trade Port, Offshore Trade will be implemented. Unlike Entrepot trade, the latter does not need the goods transportation pass system from the port of transshipment. The companies operating offshore trade could do business without the limitation of a transshipment port. Offshore trade will decrease the cost of international trade operators.

October of this year, the 19th National Congress of the Communist Party of China (“CPC”) was held in Beijing. The General Secretary of the CPC, Mr. Xi Jinping, announced a very ambitious development plan for China for the coming thirty years. He declared that China will stick to the “reform and open-up” policy. Hence, the government will give more reform power to the pilot free trade zone, and will explore the possibility of establishing a free trade port in China.

On November 10th, Mr. Wang Yang, a member of the Politburo Standing Committee of the CPC and the Vice Premier of the State Council, published an article in the People’s Daily (an official newspaper of the CPC). Mr. Yang defined the free trade port as a special area that is located within the national territory and outside of the customs; goods/capital/people can enter and exit freely.

In addition, most goods are exempted from duties and taxes. This area is a special economic function area at the highest level for an open process. It means that China will use more international and professional standards to establish the free trade port soon.

Offshore Finance is also expected to be part of the operations carried out in the free trade port. The offshore finance policies will include relevant measures to improve convenient procedures for capital flow, optimize cross border capital service for renminbi and other foreign currencies, enhance the innovation on cross border renminbi finance products, and facilitate the new out border finance model.

Nigeria Needs More Ports

The Lagos Ports are over congested causing the nation economic losses in billions of naira daily. Eastern Ports could provide a viable alternative by redesigning them as Free Trade Ports.

The Onitsha River Port which was built in 1983 by the President Shehu Shagari administration is a 1.2 million TEU port of destination that can clear goods from any part of the world, but the River will need to be dredged to allow smaller vessels come to the port from Lagos and Port Harcourt ports.

Oseakwa in Ihiala Local Government Area of Anambra State and Osemoto in Imo State are the deepest natural harbors in Nigeria and can be developed to become free trade ports of destination for goods from around the world. Osemoto has one of the potentially deepest seaports and lies only 18 nautical miles to the Atlantic Ocean. If pursued and completed as Public Private Partnerships by private investors and the South Eastern region governors, Osemoto seaport has the potential capacity of handling over 30 percent of marine traffic in Nigeria. At Obuaku, Azumini, Abia State, a free trade seaport can also be established there since it’s just a few miles to the Atlantic Ocean also.

The Ibaka Deep Seaport and Bakassi Deep Seaport projects promoted by the Akwa Ibom and Cross River State governments, respectively, can also be developed to become free trade ports since they are close to the Southeastern states, whose traders will utilize them to import and export goods, at affordable rates, rather than undergoing the stress of Lagos ports.

All Together

It is a very strategic thing for Nigeria to do urgently. Yes, the nation has to build ports in the South East and the South South to ensure the paralyses in Lagos ports are managed. There is no other better way to grow the economy of Nigeria than by building more ports across the nation. As we write, Lome Port has overtaken Apapa port on container volume. Part of the reason is that Apapa port is underperforming because of traffic. Nigeria can help reduce that stress by building functioning ports in South East and South South regions.

Lomé Port Overtakes Apapa Port as West African Regional Leader