Sunday, August 21, 2011

SMS (Text Messaging) Evolves

Text messaging (SMS) has been a major success for cellular networks - last year more than 6.1 trillion messages sent, worldwide.  Locally, the U.S. took over as the king of text, with SMS subscribers sending an average of 660 messages a month.  And with the extremely low cost of sending SMS, texting has historically been a huge profit center.

Revenue growth from SMS has started to slow, however.  Analysts attribute this to several factors.  First, as texting became popular, people switched from per-unit pricing (typically 10 cents per text in the U.S.) to larger and larger bundling plans with lower per-unit costs. More recently, wireless carriers are dropping these bundles in favor of unlimited messaging plans.  Wireless carriers are seeing higher SMS use, but generating less revenue on a per-message basis.

Second, the rise of smartphones have opened a second channel for text services through the Internet.  A number of IP-based text services have emerged in the last few years, some tied to social media like Facebook and Twitter.  These run through a wireless provider's data plan, rather than through their SMS channels.  However, wireless providers are starting to phase out unlimited data plans, which could mean more revenues from IP-based texting, or a shift back to using SMS.  In addition, many of the IP-based texting systems require both users to have the same applications open at the same time, while SMS works on any cell phone and any service anywhere in the world - a valuable feature as yet unmatched by IP-based services.  Thus, most analysts don't see IP-based texting replacing SMS as much as carving out some niche uses.

Chetan Sharma (Chetan Sharm Consulting) predicts a larger shift -
"...within 5-10 years a good portion [of users] will have shifted to Internet messaging as opposed to traditional SMS messaging... (Still) messaging is in trillions so even if somebody has millions of messages [being sent via his app] going on a daily basis, it is still a tiny fraction [of the market],"
The ability to message has enough value to users that the concept of mobile messaging isn't likely to disappear anytime soon.  There may well be shifts from one form to another along the way, but as networks and services become more intelligent, its likely that the various forms of messaging will integrate into a universal messaging system;

The article (link below) also identifies and discusses a number of the alternatives to wireless carrier SMS and MMS (Multimedia Message Service) channels.  If you're interested, click through.

Source: "SMS: The dying cash cow for wireless carriers?" FierceMobileContent

1 comment:

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