SMS-based text messaging usage is slowing and it is no question that this highly profitable mobile service is in a state of flux. In fact, in April, one carrier based in The Netherlands, KPN, reported a decline in SMS revenues by 10% within one year. The announcement was followed by a flurry of media reports wondering whether SMS was dead. Jupiter Research quickly challenged that question though, asserting in a new report that SMS will remain dominant through 2016. Although the future of SMS is yet to be seen, carriers need to find their voice in this emerging market that is obviously drawing attention from its users, or risk losing valuable revenue and market share.
Adding to the problem, iMessage was unveiled in early June, becoming the latest instant messaging platform on the market with the potential to steal SMS users away from carriers. With access to a wide variety of communication tools that use IP data networks, many users are turning to iMessage, Blackberry Messenger, Facebook, Twitter and various other free instant messaging applications to bypass the cost of traditional mobile phone texting services.
Unprepared for the rapid adoption of these IP-based messaging applications, many carriers are now left with increased data usage and network signaling with decreasing SMS and voice revenue.
While startups and social networking companies currently dominate the instant messaging market, carriers can seize the opportunity that the IP-based messaging market represents by launching their own branded portal and messaging aggregation services. However carriers will need to be careful that their messaging service does not tax the network with unnecessary signaling requests, contributing to yet another problem that they are battling.
Carriers have some inherent advantages in that they can mandate the addition of a chat app on phones and often can set up the service for customers. Also, they’re in a better position than Apple or RIM to offer the “anyone on any network” services that have made BBM a surprising hit because they can offer these services across a variety of handsets.
Still users will download free apps, so the challenge is to make a carrier-branded service more interesting. Their advantage in this regard is the ability to integrate chat with other services for more convenience and accessibility. Even with this, competing with a free service is very tough, but carriers can leverage an integrated chat/messaging service for advertising revenue or to provide convenient access to other paid or information services through hot buttons.
These types of apps are just now coming to market, with several carriers trialing Ping from SEVEN Networks, which includes chat capabilities as well as integrated access to email, social networking chats, voicemail, SMS and MMS. The innovation over other stand-alone apps is its user interface that organizes messages by contact, allowing users to view, read and send messages in one convenient place. This replaces the need to switch between Facebook, email, IM, SMS, MMS and voicemail to stay in touch with key contacts.
While it is true that the messaging market is changing, mobile users are fickle and it will be the messaging platforms that offer the most flexibility and innovation that will keep users engaged. Free applications may rule now, but when carriers begin implementing advanced platforms they will be a force to be reckoned with.