David le Page
So you’re driving down the information highway (no “super” – it’s Telkom). You’re on your way to a website in Durban, and you decide to pull in to Harrismith to check your e-mail. There, of course, your Cyberhost is cheap, friendly and accommodating – just like the Wimpy.
Well, Internet start-up company Cyberhost is like Wimpy. It runs franchises and aims to become a fixture in small towns around South Africa (but will leave out the indeterminate bun-embraced greasy, grey stuff).
Like Wimpy, they can’t afford to be snobs. Whether deliberately or inadvertently, Cyberhost has decided that they don’t have to do business with a largely middle-class white market to make money, and have sought out methods of wooing practically every part of the South African population.
So, if you live in Harrismith and want to ride your rusty old 486 personal computer on to the World Wide Web, you can get a cheaper dial-up subscription out of Cyberhost than anybody else. (Pay in advance for six months, and R69 a month gets you unlimited access, six e-mail addresses and five megabytes of personal Web space.)
But becoming the Wimpy of the World Wide Web is just a small part of Cyberhost’s ambitions. Besides, doing that would take years and years of dismal advertising and untold acres of virtual red vinyl.
Apart from those people in small towns and rural areas neglected until now by the major Internet service providers, Cyberhost is targeting people with television sets and some change in their pockets passing through public places.
These categories embrace most of South Africa’s population, so Cyberhost is likely to do rather well, even if it attracts the interest of only a fraction of their potential customers.
Television owners will be offered the chance to purchase Web TV units – stripped-down computers that will finally allow their owners to talk back to the living room monster. Using United States-built hardware, Web TV customers will be able to browse the World Wide Web using their television sets as displays, at a monthly rate not much greater than video-machine rental, and without the frequent technical hitches involved in running a conventional PC.
The cellphone payment model applies here. If you become a Web TV user, your R200 monthly fee will cover both the cost of renting your unit as well as your monthly subscription.
There are sceptics, of course.
One analyst points out that Cyberhost will have to work extremely hard to take a lead in the Web TV market, before M-Web powers in on the backs of M-Net’s leading brand and enormous, well-established subscriber base.
Another analyst sees Cyberhost doing well in the medium term, but as likely to struggle if and when a free Internet subscription business model is launched in South Africa.
This may well happen when Telkom’s telecom monopoly finally expires in 2003. Then Eskom and Spoornet, two companies with their own established and separate telecom networks, will be free to sell bandwidth to subscribers on a per-call basis, with no other charges, and very little in the way of costs.
This is the business model already adopted in Norway and the United Kingdom, where an alliance led by retailers Dixons grabbed 800 000 customers within four months of their launch. Dixons is taking advantage of a secondary telecom network built to service the national electricity grid.
What about the people with small change? Enter the CyberXpress – the digital equivalent of the phone box. Packaged in a 2m-high royal blue fibreglass bullet, a CyberXpress terminal will enable travellers, kids and even vagrants to get online, send and receive e-mail and do their surfing the old-fashioned way – standing up. Trials have been encouraging and Cyberhost plan to roll out 1 000 terminals into shopping malls, stations, airports and the like over the next few months.
Cyberhost is not thinking small. Managing director Andrew Tully has teed off with his eyes on overseas markets, to which his company hopes to export its business model.
The company is already well ahead of its franchising targets, while the unexpectedly rapid adoption of the cellphone in South Africa stands as a clear example of how the right technology can capture unanticipated markets.
Up against them is their size. When they listed last month, Cyberhost raised R40- million through the sale of 80-million shares – chickenfeed alongside the likes of M-Web and Yebonet.
Perhaps Cyberhost’s greatest ambition is that, unlike most Internet companies, they plan to break even during their first year of operation.
Watch closely. If they make it, they’re a buy.