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:

It's official: chat apps have overtaken SMS globally. The cash cow is dying. Time for telcos to wake up & smell the data coffee.—
Neelie Kroes (@NeelieKroesEU) April 29, 2013

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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Joyn (technically known as Rich Communications Services or RCS) is an industry-wide initiative designed to counter third-party applications such as WhatsApp by augmenting the traditional voice-and-text functionality offered by the carrier. It doesn’t make a huge amount of sense unless your contact’s carrier also supports it – and so far, only users in Spain and South Korea can be sure that theirs does.

Vodafone and Deutsche Telekom are the two biggest carriers in Germany, though, and both now support Joyn. That means quite a lot of people in the country will be able to use the service, the features of which are free. As in other deployments, initial usage will have to be through a special app – the Android version is available now, and iOS will follow soon – while upcoming handsets from manufacturers such as Samsung and Nokia will have Joyn baked in.

It’s too early to tell how successful Joyn will be at this early stage. It will certainly have a tough time in the U.S., where so far only MetroPCS has set it live. In South Korea, though, operator SK Telecom said in February that it had garnered a million Joyn users in just a couple of months since launch.

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That’s where Jibe Mobile comes. The company has built a cloud product that makes it easy for carriers to deliver Joyn services to their customers. And it has an app-to-app platform that makes Joyn and its underlying RCS 5 technology accessible to application developers. And that has, in turn, caught the attention of Vodafone Ventures, which is leading an $8.3 million investment in Jibe along with Tokyo-based game creator MTI and other investors. It’s the first outside funding Jibe has taken on.

The money will help Jibe build out its platform enabling developers and game makers to easily add Joyn’s rich media communications services. The first major apps and games to use Jibe Mobile to connect through Joyn will begin appearing in the first quarter.

Jibe co-founder and CEO Amir Sarhangi told me the first opportunities will be in mobile games, helping them get connected the way Xbox Live enabled gamers to participate together in games. He said Joyn can enable true mobile multi-player gaming with almost no lag. Over 4G, games can have have 40-60 milliseconds of latency, which can be improved if the carrier integrates with Jibe. That allows for some fast-twitch games that two players can participate in.

It also enables voice, video and IM communication during game sessions. Joyn also allows for easy sharing of photos and files and location data. That could all be useful for other social apps or it could be used by brands to provide better support to customers. There are also applications in education and health care.

Getting people on board Joyn makes sense for carriers like Vodafone. It keeps them in the conversation and helps them compete against over-the-top messaging services. And it ensures that subscribers use more data, which they can charge for.

But Sarhangi said there’s more to it than that. An operator could eventually charge more — say a few dollars a month — to mobile gamers who want a higher level of quality of service for their multiplayer games. That could allow the carrier to sell in essence a high-speed tier, kind of like what home broadband providers do. Operators could even share some of their added data revenue with mobile developers whose games drive these higher subscriptions.

“You’re going to see more segmentation on pricing of data because voice and data is going down. Carriers will try to recreate new value and services and this is a way for them to do it and be open about it rather than being a dumb pipe,” said Sarhangi. 

As I said with Rebtel’s new developer platform, which also helps voice-enable apps, it’s unclear how many developers will look to connect their apps. Jibe says it has more than 500 developers working on Joyn-enabled apps.

And with Joyn, you’ll need carriers to sign on. Movistar (Telefonica), Orange and Vodafone jumped on board with Joyn in Spain last month and Deutsche Telekom and Vodafone Germany are also joining along with MetroPCS in the U.S. Joyn won’t solve all the carrier problems but it at least give them something to put their hope in as they look to regain some of their declining voice and SMS revenue.

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Joyn (let’s just call it that, given it’s the brand name) lets customers IM each other and ‘enrich’ voice calls by tossing each other videos and files mid-conversation. It’s operator-agnostic, in the sense that you only need to be on an operator that offers it, regardless of the country, and Spain’s the first country in the world where the biggest operators all offer it.

Vodafone Germany also has it, as will Deutsche Telekom from December. In the U.S., MetroPCS has also introduced Joyn.

The GSMA says VoIP and IP video-calling is on the horizon too, as a function of Joyn. Here’s some marketing from GSMA chief marketing officer Michael O’Hara:

“This initial implementation of a new technology clearly required a major effort and strong leadership in the alignment of the ecosystem of manufacturers, developers and integrators, and operators. Consumers across the world will benefit from the leading efforts of these three operators in Spain.”

Still struggling to envision what sort of thing we’re talking about? Here’s a perky video that demonstrates the file-sharing capabilities of Joyn:

All this is based on the same embedded-deep-in-the-network IMS architecture as Voice over LTE. You need a special Android app to use it at the moment, although there should soon be ‘Joyn-embedded’ devices coming onto the market in early 2013. As it’s IP-based, of course, you can use Joyn services through the cellular network or through Wi-Fi.

Those Joyn-embedded handsets have to undergo rigorous interoperability testing and, once they’ve passed, you will know them by the bright yellow Joyn logo that shows up when you power the handset on. The same logo will be displayed next to contacts’ names in your phonebook

Why?

In case you can’t already tell, all this represents a severely major effort on the part of the carrier industry to get its act together. Why? Because the operators want to stay relevant.

The question is, are they already too late?

The last year or two has seen all sorts of seemingly self-defeating apps come out of major carriers – T-Mobile USA’s Bobsled, Telefonica’s Tu Me and, most recently, Orange’s Libon. These apps all offer free voice and messaging, and they offer it to any customer of any network.

In every one of these cases, the aim has been to stop customers thinking of services like WhatsApp and start remembering their operator again. The carriers have belatedly woken up to the fact that their customers increasingly think of them as flat-rate data providers, and that scares the living daylights out of them. There’s no differentiation anymore.

Now, the industry may just be pulling itself together. That fact alone betrays their desperation – it’s not like some players haven’t tried this sort of thing before (for a stunningly downbeat assessment of IMS’s chances a couple of years back, check out this 2010 post from Disruptive Analysis’s Dean Bubley).

The fundamental problem is that users already have these services. People are already invested in WhatsApp and Skype. The operators are now counting on Joyn becoming so ubiquitous that late adopters pick it up en masse, and it becomes a new standard in terms of usage as well as installation.

Do they themselves believe in it? Maybe. One might even look at Tu Me, Bobsled and Libon and see these ‘over-the-top’ services as a sign that the operators launching them don’t really have faith that Joyn will take off.

This is not to say that Joyn won’t be a success. These are huge companies we’re talking about, and if they manage to keep their my-enemy’s-enemy alliance together, they’ve got a lot of clout. But, in the worst-case scenario (for them), we’re looking at a last gasp.

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