Skip to main content

How Social Messaging Services will Displace SMS

Mobile phone short messaging service (SMS) has been a huge windfall for most telcos. That said, here in the U.S. the inter-carrier deployment was late to market and SMS benefits were rarely promoted effectively by service providers.

Regardless, SMS was a success due mostly to the eager early-adopter subscribers -- typically young girls who used word-of-mouth to increase adoption among their friends and family.

Meanwhile, the revenue generated was a cash cow -- even for the most inept telcos. But in the absence of any meaningful service enhancement, and with pricing that was high relative to the perceived value, it was just a matter of time before this party was over.

New estimates from Ovum indicate that increasing use of alternative IP-based social messaging services on their smartphones has cost mobile network service providers $8.7 billion in lost SMS revenues in 2010, and $13.9 billion in 2011.

According to Ovum's latest market study, they expect the SMS decline -- representing nearly 6 percent of total messaging revenue in 2010 and 9 percent in 2011 -- to accelerate as the popularity of free messaging apps continues to grow.

Ovum says they have warned network operators to rework their legacy SMS offerings, and secure their future position in the mobile messaging market. But given the unimaginative approach that most mobile service providers use to market their value-added services, I believe that there's little hope they can stop the loss of revenue.

"Social messaging has disrupted traditional services, and operator's revenues in this area will come under increasing pressure," says Neha Dharia, consumer analyst at Ovum.

However, despite the threat to messaging revenues, Ovum believes that the strong presence of social messaging should still be looked upon as an opportunity.

"This threat will drive telcos to consider alternative sources of revenue, such as mobile broadband. And now the market has been tested, operators know what types of messaging services work," said Dharia.

Theoretically, operators should be in a position of strength -- because they control the entire messaging structure through their access to the user's phone number and usage data.

The established billing relationship is a great advantage, as is the fact that operators control to a great extent the services to which the user is exposed.

However, offering innovative messaging services and aligning revenue schemes with models in the social world will not be enough to win the battle against social messaging. Industry-wide collaboration and co-operation will be the key to growth in the messaging realm.

Operators must remain open to partnering with app developers, sharing end-user data with them and allowing integration with the user's social connections. Working closely with handset vendors will also be important; they control some of the most popular social messaging apps, and can also provide preloaded applications.

"The most important factor, however, will be co-operation between telcos. They are no longer competing merely among themselves, but must work together to face the challenge from the major Internet players," concludes Dharia.

Popular posts from this blog

Why Healthcare and Smart City Apps Drive 5G IoT

Fifth-generation (5G) wireless technology for cellular networks is a successor to fourth-generation (4G) wireless technology. By 2023, Juniper Research anticipates that there will be over 1 billion 5G connections globally. The technology will provide the data infrastructure for the advancement of wireless communications and for new developments in the Internet of Things (IoT) -- including smart cities and healthcare. 5G IoT Market Development According to the latest worldwide market study by Juniper Research, 5G IoT connections will reach 116 million globally by 2026 -- that's increasing from just 17 million connections in 2023. Juniper analysts predict that the healthcare sector applications and government or other smart city services will drive this outstanding 1,100 percent growth over the next three years. Juniper examined 5G adoption across key industry sectors -- such as the automotive, mobile broadband, and smart homes -- and forecasts healthcare and smart cities will accoun

How Savvy Leaders Re-Imagine Work in 2023

As we look to the year ahead, there will be significant challenges and opportunities facing the Chief Human Resource Officer (CHRO) role. In order to be successful, savvy HR leaders must be prepared to take proactive steps that adapt and evolve. "HR leaders have faced an increasingly unpredictable environment amid many organizations mandating a return to office, permanently higher turnover and burnt out employees," said Emily Rose McRae, senior director at Gartner . HR Innovation Market Development One of Gartner's key predictions for 2023 is that the use of artificial intelligence (AI) and automation will continue to increase within the enlightened digital workplace. This transition will require HR leaders to develop new skills and competencies in order to effectively manage and lead teams that are increasingly relying on these enabling technologies. Additionally, HR leaders will need to ensure that their organizations are investing in the necessary infrastructure and re

Secure Microcontroller Market to Reach $2.2 Billion

In spite of the volatile global semiconductor industry being plagued by ongoing macroeconomic and political disruption issues, the secure microcontroller (MCU) market should continue to prosper. While the forecasted total available market has contracted -- especially in the smart home, retail, advertising, and supply chain spaces -- secure MCU shipments will likely be temporarily affected.  According to the latest worldwide market study by ABI Research, the secure microcontrollers market will grow to reach $2.2 billion by 2026. Secure Microcontroller Market Development "In part, this is due to the niche nature of security demand which commands a higher value proposition," says Michela Menting, research director at ABI Research . In the short term, potential supply chain issues due to trade embargoes and global COVID-19 pandemic quarantines at manufacturing sites will affect availability. Yet, demand for security, especially in general purpose microcontrollers, will ensure the