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Summary:

According to analysts at Informa, IP-based platforms such as WhatsApp now carry more messages than SMS infrastructure does. However, we should be cautious about how we interpret the figures.

Google SMS In Africa
photo: Flickr / whiteafrican

There’s a reason why mobile carriers are scared of third-party messaging apps such as WhatsApp, and here it is: people are now sending more messages over these services than they are text messages.

We now know this for a fact, courtesy of analysts at Informa. As Europe’s digital chief, Neelie Kroes, greeted the news on Monday morning:

Informa says 2012 saw nearly 19 billion messages sent over these apps each day around the world, versus 17.6 billion SMS messages. The analyst house reckons the contrast will be even starker in 2014, with 21 billion text messages projected, against almost 50 billion app-based messages.

As you will note, this suggests that SMS volumes will continue to increase, at least in the short term. Nonetheless, it is clear that the big growth is to be found in, er, the data coffee – spurred along by the likes of Nokia, which is now selling phones with dedicated WhatsApp keys.

However, things may not be as bleak for the mobile operators as they seem.

Hazy picture

First off, while the volumes of non-SMS messages has overtaken that of traditional texts, the user numbers remain significantly lower – although how much lower is a bit unclear.

According to Informa analyst Pamela Clark-Dickson, there were 3.5 billion SMS users in 2012. Regarding the chat apps, Clark-Dickson only took 6 into account, namely WhatsApp, BlackBerry Messenger, Viber, Nimbuzz, Apple’s iMessage and KakaoTalk. At the end of 2012, she said, there were 586.3 million users of these platforms, but that’s not taking into account other giants such as Facebook Messenger for Android (somewhere between 100-500 million installations) and China’s TenCent (around 300 million users).

Even if there were, let’s say, a billion chat app users, the disparity between message volume and user numbers shows that people who use these “over-the-top” (OTT) apps use them more frequently than those who use SMS – specifically, the average OTT app user sends 32.6 messages a day, and the average SMS user just 5 texts. This stands to reason because OTT apps are generally free to use, so we should therefore be wary of assuming that every OTT message represents a “lost” SMS from a revenue perspective, in much the same way as it’s illogical to claim that a free “pirated” song download represents a lost sale.

Those chat app users are probably also SMS users, because – for example – WhatsApp is of little use when you’re trying to message someone on a different platform (or someone with a basic dumbphone). There, SMS is and remains the great leveller: any mobile phone can use it. This is particularly important for some enterprises.

Whither Joyn?

And then we have a big unanswered question: even when SMS tails off, how big a chunk of the IP-based messaging market will the carriers themselves own?

Thing is, Informa’s analysis of the market does not include projections for Joyn, the industry-wide drive to create a common, interoperable messaging and file-sharing platform that works on all (or at least most) operators’ devices — Joyn has only just kicked off, so there are no real takeup figures from which to extrapolate. Precedent suggests that the mobile industry is incapable of acting in concert, but that doesn’t mean it can’t buck the trend when its back is against the wall.

“Mobile operators do have the opportunity to provide their own IP-based messaging applications,” Clark-Dickson noted.

And then we have services such as Telefonica’s Tu Go and Rogers’s One Number that extend traditional handset functionality onto the desktop. These services heavily blur the line between SMS and IP-based messaging – if the carriers can pull off this sort of thing while monetizing it in some way, what does it matter whether the medium used is technically SMS or something else?

Also don’t forget that carriers can build offerings around these third-party apps. For example, WhatsApp has partners with 3 Hong Kong and RCom, which sell flat-rate bundles specifically for WhatsApp use while at home or roaming. It may break the principle of net neutrality, but it’s a tactic some carriers are employing.

Either way, though, what’s clear is the speed at which all this is happening. The SMS is 20 years old and chat apps have only been around for around 5 years. Although we should take care when predicting the results, the trend of IP-based messaging replacing SMS certainly appears unstoppable.

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  1. chat apps may be only 5 years old, but chat technology has been around lot longer. i recall as early as early 90s.
    /chatvana

    1. This is true – well, actually IP-based messaging has been around for at least three decades. But before it made its way onto handsets in a significant way, it wasn’t a competitor to SMS.

  2. Are SMS still cash cows?

    here in Europe, nearly everybody I know got a plan with unlimited free SMS.

    1. That’s a valid and interesting point. However, the true cost of that flat-rate SMS usage differs from country to country. I used to live in the UK, where phone contracts are mostly super-cheap. Now I’m in Germany, where they are pretty expensive by comparison, so I’ve actually switched to a pre-pay service where the data, and only the data, is flat rate. I just figured I don’t need a good deal on 1000 SMS messages a month, because I don’t text much, but when I *do* now text I pay a reasonably high per-message rate.

      In short, it depends on the user, the operator and the country. SMS is certainly less of a cash cow where flat-rate pricing comes into play, but it still ain’t free.

  3. crucialdebtcrusher Monday, April 29, 2013

    U.S. T-mobile wants $20/mo for text messaging on the family plan. My wife and I just use Google Talk. I find my best friend using the Steam app. If I need to send an actual text, I send it from my Google Voice number instead.

    1. In addition to costs SMS is just very inconvenient. I know a few people who will want to have a conversation via SMS. Between tapping out a message on my phone and turning the screen on every time, it’s very time consuming. It does a lot to disrupt the flow of what I’m already doing. Alternatively if it’s a serious faster paced conversation I can’t do anything but stare at my phone.

      With an IM service like Google Talk, I can move from my phone to a computer and continue the conversation using a real keyboard. Being on the computer allows me to reply much quicker. If they’re still on a phone I have time to multitask. If they are also at a computer the pace of the conversation picks up over all and we can get through it quicker allowing me to get back to what I was doing sooner.

      Honestly I would turn off SMS on my phone if it weren’t for the fact that people would then send me messages I don’t receive and they wouldn’t know that I wasn’t receiving them.

  4. crucialdebtcrusher Monday, April 29, 2013

    U.S. T-mobile charges $20/mo for text messaging.
    My wife and I use Google Talk instead.
    My best friend can be found on the Steam app. Some folks can be found on Facebook.
    When I want to send an actual text message, I use Google Voice.
    SMS fees are basically a tax on a lack of computer savvy.

  5. jay a.k.a bajay Monday, April 29, 2013

    India and Indonesia have GupShup; sms based social media platform.

  6. I’m going to go out on a limb and say that “IP-based” messaging has always been ahead of SMS. You have to include AIM, ICQ, Yahoo Messenger, MSN Messenger (or whatever they call it these days), Google Talk, etc. When you’re not including Facebook how can you possibly claim to have a remotely accurate number? I wouldn’t be surprised if Facebook alone accounted for more than SMS being that Facebook is the main way people keep in touch these days.

    The notion that instant messaging wasn’t a competitor to SMS before it was on phones is silly. Long before most people had smartphones, you had AIM on your phone. Before that it was still competition. I can clearly recall instances where someone would send me a text and I would reply to IM me instead; and our conversation would then take place in IM. In that on instance alone it is at least several text messages that didn’t get sent because of a competing method of communication.

  7. customers want carriers to just be dumb fat pipes. unfortunately, the management of carriers is too dick-driven to realize that this would make them far more efficient and effective.

  8. I find WhatsApp significantly more reliable for messaging than SMS on my local provider (Vodafone NL).

    Yesterday, just to provide some anecdata, I sent two SMSes to another Voda NL subscriber. Only one arrived. That subscriber sent me three, of which I received all of them, one 8 hours late, one 20 times and one three times, starting an hour after they were sent.

    They’re throwing 300 text messages into my bundle to encourage me to overuse this quota. I’m on the verge of no longer using SMS at all, just due to the reliability and delay issues.

    Forgive me if I’m wrong, but a decade ago this wasn’t an issue at all, it was eerie how fast SMSes got through, and if one went missing it was definitely strange (and most likely an operator-operator issue).

  9. SMS is the only public texting medium. All other mediums are private and closed. Over time the medium will maintain its position. It’s not always about the cooler technology. It’s about critical mass. We need a standard and we have one–it’s SMS.

    Case in point, Zipwhip launched landline texting in the U.S. 3 weeks ago. That means all of your businesses that are still on landlines and may always be on landlines can finally interact over SMS. You can’t do that with a private medium.

    Zipwhip also allows your Android texts to be available on the web, your tablet, and your desktop. This modernizes SMS to level of something like Google Talk.

    SMS is nearly free in the U.S. so there is no pricing pressure that would make consumers switch. SMS has a long life left in it.

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