Local social network Mxit said on Friday that it is shutting down its commercial operations and donating all of its intellectual property and technology assets to independent public benefit organisation ‘The Reach Trust’.

Mxit reported in 2013 that its monthly active user base was 7.5 million that year. But this figure has dropped to just 1.2 million monthly active users in July 2015, according to a Mxit statement on Friday.

Mxit, in its statement, said its application would still be available to the public as a download.

But as part of the deal, Mxit chief executive Francois Swart will depart after three years in charge. Almost 30 Mxit staff will also be transferred to The Reach Trust under CEO Andrew Rudge and ex-FNB CEO Michael Jordaan, who has been the chairperson of Mxit, will not be actively involved with the operations of The Reach Trust.

As part of the change Mxit will also exit its India and Nigeria businesses.

The Reach Trust has been providing free services such as text-based counselling and education initiatives to up to 10 million people since 2012.

“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,” Swart said in the statement.

Growing competition

Mxit’s fall as a commercial service has come amid intense competition from international offerings such as WhatsApp and Facebook.WhatsApp has over 10 million users in South Africa while Facebook has 13 million users in the country, according to recent research from World Wide Worx and Fuseware.

“We’ve seen the last throw of the Mxit dice,” Arthur Goldstuck, managing director of World Wide Worx, told Fin24 on Friday.

“The social platform that introduced South Africans to instant messaging has seen a precipitous drop at a time when most other networks have climbed,” he added.

Goldstuck further told Fin24 that Mxit’s fall in user numbers started with the emergence of BlackBerry Messenger (BBM) about five years ago.

Ex-Mxit staff react

Mxit CEO Francois Swart was not available for comment on Friday but one former staff member at the company has expressed his view on the social network’s announcement.

“We were incredibly passionate about what we were doing and what Mxit meant to millions of South Africans over the years. It’s hard not to see the final shut down as a personal failure and I know many of my former colleagues feel the same way,” David Luis, former head of internal communications at Mxit, told Fin24.

He said that the company believed it was prepared for the arrival of smartphone technology.

“We were never unaware of the threat of smartphones, but I personally believe that we were totally unprepared for how soon a cheap smartphone like the (MTN) Steppa would arrive, and the degree to which it would take over the feature phone market.

“The success of those cheap smartphones I believe put Mxit – sitting without a decent version for smartphones – on a downward spiral that was impossible to come back from, despite the massive effort of the team.”

The Reach Trust, though, has expressed how it is looking forward to using Mxit’s technology with a number of education projects planned in South Africa over the next year.More than 500 000 learners access educational apps on the platform every month, according to Mxit’s statement.

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

Update: Closure not surprising – expert

Local technology expert Arthur Goldstuck says he’s not surprised at Mxit’s commercial closure.

Mxit reported in 2013 that its monthly active user base was over six million in SA that year. However, this figure has dropped to just 1.2 million monthly active users in July 2015, according to a statement from Mxit on Friday.

Goldstuck, who is the managing director of technology research firm World Wide Worx, said he anticipated Mxit’s move to exit its commercial operations in a recent study on South Africa’s social media landscape.

“So, from our perspective it’s no surprise,” Goldstuck told Fin24.

“My question was: Is this the last throw of the Mxit dice and in effect that was what we have just seen,” Goldstuck said.

Mxit reported that it had 2.7 million monthly active users in South Africa at the end of 2014, meaning that the fall to just 1.2 million monthly users in July 2015 is dramatic, said Goldstuck.

“So, to drop in six months by more than a million – then the writing’s on the wall,” Goldstuck added.

Mxit, nevertheless, had high engagement on its service when compared to other networks, Goldstuck said.

But the social media landscaped has changed since Mxit first launched in 2005 as a feature phone app. Facebook today commands 13 million users in SA while WhatsApp has over 10 million users, according to recent research from World Wide Worx and Fuseware.

“What’s very clear is that the emphasis of social networking is now on global networks that allow people the maximum possible network of people,” said Goldstuck.

“It’s not about the number of people that they can reach as such but the fact that a large network spanning the globe gives them a greater guarantee that they’ll be able to network with almost everyone in their circle.

“You can now find anyone you want to on Facebook,” Goldstuck added.

Fin24

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