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Mobile SMS, the Little Data Engine That Could

A new report from Portio Research forecasts a healthy future for SMS, which continues to be the shinning star of the mobile data services show with traffic volumes and revenues that continue to confound predictions.

Although the growth of SMS revenues will not be as aggressive as the growth of SMS volumes due to declining prices, by 2012 global SMS revenues are expected to reach $67 billion, driven by 3.7 trillion messages.

The report, "Mobile Messaging Futures 2007 - 2012" outlines an exciting future for other mobile messaging technologies especially instant messaging and mobile e-mail amid continued strong worldwide subscriber growth.

If there was one message this report should get across it is this -- SMS continues to be a phenomenal success as the cheapest, quickest and easiest to use form of peer-to-peer mobile communication. Markets have continued to grow and greatly exceeded the predictions of similar research carried out in previous years.

SMS traffic has not flattened out in mature markets but continued to boom while the U.S. market has grown much faster than some expected, but not me (more on that point, later). The SMS market despite declining prices continues to be fueled by new subscribers.

In Asia alone, in the five minutes it takes to read this press release and in every subsequent five minute period for the next six years, 2,267 people will have bought their first ever mobile phone. For the majority, these new handsets will offer little affordable functionality apart from basic voice and SMS services.

This translates into an additional 1.4 billion new mobile subscribers in Asia alone with a consequent boom in SMS traffic in the region. By 2011, the report predicts, mobile instant messaging (MIM), especially in markets such as North America, will supplant SMS as the mainstream messaging service as smartphones and wireless Internet proliferate. Operators, the report suggests, need to strike a balance between SMS and IM pricing.

Back in January of 2004, I wrote a column for Telephony magazine regarding my concerns about the U.S. mobile service provider's lack of momentum with basic messaging and data service market development -- relative to the leading global markets. At the time, American carriers were convinced that they could jump ahead to MMS, and downplay SMS in the process, because simple messaging would essentially become obsolete.

Despite my attempts to explain the significance of applications evolution, and the fact that basic services rarely completely vanish from the marketplace -- they find a niche and coexist with new services -- I was unable to convince the telco marketing executives that I spoke to about my perspective. BTW, I offered proactive demand stimulation suggestions which also fell on deaf ears. Anyway, as the CTIA show came to a close this week, perhaps it's a good time to reflect upon the little data engine that could.

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