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From zero to hero and back to zero in 10 years

Originating from Stellenbosh and created by Herman Heunis, Mxit is closing shop after 10 years. The company announced that it would be donating all of its intellectual property to The Reach Trust.

According to various media reports CEO Francious Swart is stepping down and all Mxit employees will be employed by The Reach Foundation.

“Whilst Mxit overall has seen a decline in activity and engagement over the past 18 months, the use of services offered by The Reach Trust on Mxit has been stable and in many cases show an upward trend,” says Swart.

The Reach Trust is an organisation, established in 2012, that  develops and offers cost-effective mobile solutions. According to their website their solutions are “designed to cost-effectively enable the transition from a resource-based to a knowledge-based economy, whilst focusing on three priority areas to improve lives through education. ”

“With the power of mobile technology in the hands of almost everyone in the country, we believe it is critical to extend and expand the access to mobile content and services to accelerate social and economic change,” says Andrew Rudge, CEO of The Reach Trust.

Mxit Timeline

  • 2005: Launch
  • 2007: Naspers buys 30% stake
  • 2008: 3 million users (claimed)
  • 2010: 27 million users (claimed)
  • 2011: World of Avatar purchased 90% of undisclosed amount (Rumored to be around R500 million)
  • 2014: 4.9 million active users (claimed to be around 1 million)
  •  2015: Mxit closing shop. IP transferred to The Reach Trust

Why the decline of Mxit?

  • Lower consumer data costs: Allowing consumers to utilise other forms of social media platforms (Facebook, WhatsApp, Blackberry messenger). Cell C launching its free WhatsApp data certainly didn’t help Mxit in keeping its numbers.
  • Cheaper availability of smart phones (and declined use of feature phones). Mxit was often used by lower LSMs. Mxit was one of the few social platforms that worked across feature and  smart phones. With the increased affordability of smartphones users switched social platforms.
  • Digital apathy towards Mxit: Seen as tired and unsexy. Many early adopters changed to newer platforms. The company was focused mainly on the lower end feature phones that utilised J2ME platform, mainly used by the old Nokia phones. It was seen as lagging and unsexy. It released across other platforms, entering IOS and Android but it never proved popular. Nokia and the J2RE market share continued to plummet as did Mxit.
  • Exaggerated numbers: At its peak Mxit claimed to have over 50 million users. By July 2014 numbers reporred to be at 4.9 million. Recent sources place the numbers under 1 million active users.
  • Management and vision change: During the latter years of its life Mxit went through fundamental changes in ownership and management structure. In 2011 Herman Heuns and Naspers sold their 90% share to Alan Knott-Craigs company, World of Avatar for an undiscolsed amount (the deal was rumored to be worth around R500 million – the other 10% was held in a staff trust). With all the ownership changes and the loss of intellectual property one cant help but feel that the vision changed and that competitive products gained an edge with their offerings and focus.

In is unclear what The Reach Trust intentions are for Mxit in the long term. The decline of Mxit is certainly a sad story for the South African tech  community.

What can we learn from this?

Tech is forever changing as so should your business, its products and its offerings. You and your business operate within the micro, market and macro environment. Any number of changes in those environment could have a huge impact on your offering.

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