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Microsoft races to establish foothold in Africa

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By the numbers

• 20: Number of African countries Microsoft is in.

•750: Number of Microsoft employees in Africa.

• $75 million: The additional amount Microsoft plans to spend in Africa in the next three years.

• $40 billion: Estimated amount to be spent on IT in Africa in 2016, up from $30 billion last year.

By The Seattle Times
Saturday, March 23, 2013, 9:00 p.m.
 

SEATTLE — When Microsoft announced recently that it was starting a big push to grow its market in Africa, it cited the continent's growth opportunities, calling Africa a “game changer in the global economy.”

Similarly, IBM, Google, Intel, Hewlett-Packard and other tech companies have begun expanding their presence in Africa.

As the growth of tech hardware, software or services flattens or declines in mature markets such as the United States and Western Europe, and markets in China, India and Russia grow increasingly competitive, many of the largest tech companies are looking to Africa.

“The U.S. and Europe are stagnant. China is growing but plateauing, as is India,” said Roz Roseboro, principal Middle East and Africa analyst at research and consulting firm Analysys Mason.

“You've got these big multinational companies looking at Africa and saying: ‘You've got growth here,' ” she said.

Some factors have coalesced to make the continent attractive to major tech firms. The political situation in many countries has become more stable, with governments open to cooperating and forming joint projects with foreign, multinational corporations.

More tech infrastructure is being built, including undersea fiber optic cable systems bringing faster broadband connections to Africa's coasts and terrestrial cables to extend the networks inland.

China's government and some of its companies have invested in African infrastructure, such as electricity grids, in return for natural resources.

There is a growing middle class and rapid urbanization. And the population of the continent, as a whole, is young — with an average age younger than 20 in some countries, Roseboro said.

“They're the ones who want this (tech) stuff and the most willing to pay for it,” she said. “And they're the ones evangelizing — it's going to be the 16-year-old student who shows his mom how to use it.”

Still, there are challenges to overcome.

More education and skilled labor are needed to help build the economy and the tech ecosystem, to say nothing of the consumer and business markets.

Basic infrastructure is lacking. While strides have been made in increasing broadband access, most people in Africa don't have online access. For those who do, connections can be slow or costly.

“For Microsoft to sell software, for Google to sell ads, you have to get people online,” Roseboro said.

In other words, to have a market to sell to, the tech companies must invest in building the market.

Toward that end, many of the strategies pushed by tech companies expanding their footprint in Africa include investments in infrastructure as well as increasing Internet access, developing people's skills and education, and establishing research and technology hubs.

Microsoft began its 4Afrika initiative last month — an effort that has the company spending an additional $75 million in the next three years over what it's been investing there.

The initiative includes working with the Kenyan government and a Kenyan Internet service provider to deliver low-cost, high-speed wireless access; getting millions of smart devices into the hands of African youths; bringing a million small- and medium-sized businesses online; providing skills training; and starting an “online hub” through which small- and medium-sized businesses can gain access to free products and services from Microsoft and others.

It includes a partnership with Chinese phone manufacturer Huawei to introduce a Windows Phone, called Huawei 4Afrika, with features and apps specifically designed for the Africa market.

Getting a foothold in the mobile market is especially important in Africa, where, for many, a PC is too expensive and a feature phone or a smartphone is the first and possibly only computing device for many. Indeed, mobile payments — using a phone to make payments or do banking — are common in Africa.

 

 
 


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