Despite the growing popularity of smartphone-based instant messaging (IM) applications such as WhatsApp and WeChat, the traditional text message, based on SMS, is far from dead, a new research report claims.
In fact, mobile operators are expected to enjoy increasing revenues from SMS until at least 2017, according to Deloitte’s “Technology, Media and Telecommunications Predictions 2014”.
IM services may win the battle for message volume in 2014, but SMS will still be the winner in global revenue terms, Deloitte says. “We expect SMS to generate significantly greater revenues than IM even as far out as 2017, by which point global SMS revenues are expected to have started falling.”
The superior revenue-generating ability of SMS is due to its ubiquity, the infrequency with which it is used and its price, according to Deloitte.
“SMS is the one messaging standard common to almost every mobile phone,” it says in the report. “There are 3,2bn unique mobile subscribers that can send and receive SMSes.”
IM applications, on the other hand, typically require access to a smartphone or tablet and need a mobile data plan or a connection to a Wi-Fi network. “Both are ubiquitous in some regions of the world, but in some markets, such as most of the African region, only a minority has mobile broadband, and even fewer have fixed broadband.”
Many IM apps are also incompatible with one another, the Deloitte report notes. A WhatsApp user cannot send a message to a WeChat customer, for example. However, the two can communicate with one another using SMS.
The report says that mobile phone users may be relatively insensitive to SMS tariffs as they send few text messages relative what they send using IM.
And substitution by users of SMS for IM services may not be all bad news for mobile operators, even if SMS revenues eventually do go into decline.
“While IM may be taking revenue from mobile operators in the form of lost text messaging revenues, it may also be driving demand for mobile broadband. And in 2014, revenues for mobile broadband may overtake SMS,” the Deloitte report says.
“While it is difficult to assign an exact value for the impact of IM on the take-up of mobile broadband, it is sizeable and should become larger still over time as IM services are used increasingly to send large audio and larger video files.”
According to Deloitte, SMS’s heyday is approaching. However, in 2014 it should still generate significant margin for mobile operators. “Its importance should be neither overlooked nor underestimated.” — (c) 2014 NewsCentral Media
