Techcentral: IS business solutions director Hillel Shrock says Afrihost’s product is a clever marketing strategy to help it gain traction. “It’s difficult to position one’s brand without having some price advantage,” Shrock says.
“The question is to what extent this is sustainable,” he says. Though Shrock expects broadband prices to come down “dramatically” in the next few years, he says it’s difficult for smaller players like Afrihost to maintain loss-leading prices for too long.
Visser says Afrihost’s move could result in a price war.
SHOOT: Let's hope so. Good to see some market disruption going on.
Internet service provider Afrihost has set the proverbial cat among the pigeons by slashing its broadband prices to below cost in what could mark the start of a price war.
Afrihost, which provides Web hosting services, entered the broadband digital subscriber line (DSL) market just two months ago. But already it’s causing a stir by cutting the price of bandwidth — at least temporarily — to just R29/GB, or 2,9c/MB. Until now, DSL broadband prices have typically been set at between R50/GB and R70/GB.
Afrihost CEO Gian Visser, pictured, concedes that the company is losing money at R29/GB. But he says the offer makes good commercial sense.
He says Afrihost has taken the money it was planning to spend on advertising its DSL products and instead decided to use that cash to subsidise bandwidth.
However, he says the new, lower price won’t necessarily last long for new subscribers. “It could end tomorrow; it could end in a few weeks,” he says.
|
clipped from www.techcentral.co.za
No comments:
Post a Comment