Will Voopee be a cushion for XOX?

• XOX-Voopee may not be compelling enough for users to switch from their current messaging apps
• Still, product has some interesting features that XOX can leverage and improve on to be a real player

NEWS ANALYSIS: ON Jan 27, XOX Bhd, the country’s first mobile virtual network operator (MVNO) to be listed on Bursa Malaysia, made headlines with the launch of XOX-Voopee, its latest offering for the mobile market.
 
The launch, held in a popular dance club in Kuala Lumpur on a Friday evening and attended by the media, XOX dealers and the country’s top shuttler Lee Chong Wei, was seen as a success.
 
While the launch event, the attractive models, the spotlight and the music may have lifted the mood of most people in the club, I couldn’t help but wonder if the worst was over for XOX.
 
Flashback to a few months ago, when the company did not submit its annual audited financial report on time, putting its shares at risk of being suspended from trading. Naturally, investors reacted badly to the news – XOX shares fell by as much as 26% within just a few days.
 
[To be fair, the company’s shares did not end up being suspended as it managed to submit its report before the second deadline.]
 
Of course, this was not the first time investors have been pessimistic on XOX stocks. During its first day trading on Bursa Malaysia, its share price fell to 52 sen per share – a 65% decline against its initial public offering price of 80 sen per share.
 
So now Voopee has been launched. The product, which essentially a mobile smartphone app, allows users to make phone calls and send text messages to another fellow Voopee user (on a data network) without any charges. Users are also able to call fixed-line, non-Voopee mobile numbers, at an affordable rate.
 
The mobile app is currently available for Android devices. Soon, an iOS version of the app will also be available.
 
So far, XOX seems gung-ho over the new product. Its chief executive officer Ng Kok Heng said that it targets to triple its subscriber base to one million by the end of this year, from about a base of about 300,000 currently.
 
There are a few reasons that could be driving Ng’s optimism. As at the third quarter of 2013, there were over 43 million mobile subscribers in Malaysia (which has a population of 30 million), representing a penetration rate of 146.1%.
 
With Voopee, XOX does not need to compete head-on with the incumbents in this saturated mobile market. Trying to convince the mobile customers of an incumbent operator to switch over to XOX would be quite the challenge, as opposed to getting them to download a free app and trying it out.
 
Even without needing to go head-on against the telecom giants, there is still a huge market for XOX and its mobile app. In a recent news report, based on a study conducted by Ericsson ConsumerLab, it was estimated that the smartphone penetration rate in Malaysia increased from 47% in 2012 to 63% in 2013.
 
This means, almost two-thirds of Malaysians (or close to 20 million) now own a smartphone, all potentially be customers for XOX-Voopee.
 
With the app, it is also easier for XOX to reach out to other markets. According to the company, the app is currently available in Singapore, Hong Kong and Indonesia.
 
Besides the potential size of the market, the launch of the mobile app is also in line with mobile user trends. According to a survey carried out by the Malaysian Communications and Multimedia Commission (MCMC) in 2012, 56.3% of smartphone users are using mobile apps for texting.
 
When it comes to calls, the survey added that 42.3% of them used mobile apps to avoid charges.
 
This probably explains why there are a few other messaging-related apps were launched in the country over the past several months.
 
While it is understandable why XOX is optimistic on the product, I personally believe that the product will unlikely be a hit.
 
Although some of the product features are interesting, they may not be enough to entice the mass market to use the app regularly.
 
Currently, smartphone users are able to send text messages and voice messages via apps like WhatsApp, WeChat, BBM and even KakaoTalk. In a way, while its app is of a different kind, XOX is not only going against established market leaders, but the recent news that Facebook is acquiring WhatsApp for US$19 billion also means it is going against competitors with extremely deep pockets.
 
While there is a saying ‘new is always better,’ such a compulsion alone is unlikely to see users ditching their existing apps for a new app in sufficient numbers to create a critical mass.
 
XOX’s app allows users to also call fixed-line and non-Voopee mobile numbers at a low rate. A look at XOX-Voopee website reveals that calls to other Malaysian mobile operators cost 10 sen a minute. At such a rate, it may be attractive to prepaid users who are paying about 36 sen per minute.
 
Still, while the 10-sen a minute rate may look appealing, will its so-called ‘HD’ (high definition) voice call quality meet customers’ expectations? XOX has made it clear that the quality of the voice call is dependent on the quality of the data connectivity.
 
No doubt, most of XOX-Voopee’s key features don’t appeal to me, as I am comfortable with my existing apps. However, there are one or two features that I may find useful for some occasions. For example, if I am in overseas and need to make a phone call to a fixed-line, the app allows me to do so at a rate of 10 sen per minute.
 
The other feature I would appreciate is the Call Forwarding function – since the XOX-Voopee line is only active whenever one has a data connection, it is vital for these calls to be forwarded to an active line.
 
Also, the fact that I can buy voice/ text credits on a prepaid basis is also a plus point, as I would not be subjected to any monthly commitment fees and can top up whenever I need to.
 
But while I think Voopee is unlikely to be a big hit in its current form, I believe there is room for it to evolve into a ‘must-have’ app. XOX needs to turn Voopee into more than ‘just a messaging app.’
 
Perhaps, it can consider incorporating other apps like games [like what LINE is doing], social networking [which will certainly be part of Facebook’s plans], e-commerce, online shopping, payments and information services as part of its overall app strategy. This would certainly help keep its customers longer.
 
XOX also needs to constantly improve and keep the app relevant, as it needs to catch the second wave of the mobile messaging apps trend. This is because according to Ovum in a news report, the analyst firm expects the number of messages ‘transacted’ on social messaging apps to almost triple from 27.5 trillion in 2013 to 71.5 trillion in 2014.
 
As a proud Malaysian, I certainly hope to see more Malaysian success stories developing, especially in the tech and telecommunication space. There is still time for XOX to make this app better and more relevant and fill that gap.
 
Related Stories:
 
Social messaging apps will cost operators US$32.6bil: Ovum
 
US$19b for WhatsApp: What Facebook is really getting
 
Tencent ups the ante with WeChat, looking to build ecosystem
 
SEA chat app war: KakaoTalk wants to be ‘the one’
 
LINE casts itself deeper into Malaysian waters
 
 
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