Say What You Will, SMS is Alive and Kicking

Copenhagen 03/05/2013

With app-to-person SMS and person-to-app SMS, SMS is far from breathing its last breaths.

The past couple of weeks have been a rather bad for SMS. Everyone seems to have it in for the faithful service that only recently turned the big 2-0, but before we rush to such a dramatic conclusion, we think it’d be wise to assess the situation.

Whatsapp

Towards the end of April (2013) Informa released some figures that kick started all this furor. They stated that that some 19 billion messages were sent in 2012 via WhatsApp, BlackBerry Messenger, Viber, Nimbuzz, Apple’s iMessage and KakaoTalk, compared to ‘only’ 17.6 billion SMS messages (Informa also predicts that this time next year 50 billion messages will be sent via apps, and 21 billion via SMS). At first glance, it would appear that SMS is fast losing the battle of messaging. But not so quick! In our opinion, there are more sides to this story, and in all, SMS come out trumps.

For a start, we have the view that SMS is the mobile carriers’ cash cow, and that these new (and not-so-new) apps are killing the old girl, which will lead to huge profit losses for all carriers. Now while SMS might be something of a cash cow, and while apps might be carving a large slice of messaging for themselves, this in no way means that mobile carriers have anything to worry about. After all, apps need data, and data costs money. What carriers lose in SMS, they’ll make up in data*. What’s more, every carrier can create their own messaging app if they feel that’s the way to go.

Then there’s the view that SMS will soon become obsolete due to the aforementioned apps, but what we mustn’t forget is that SMS is the one universal messaging platform, no matter what phone you’re using, what company you’re with, or what OS you’re on. If you want to make sure you reach someone (and everyone) – SMS is the way to go.

SMS

This view also sees SMS as being used for person-to-person (P2P) messaging, and P2P only, which couldn’t be further from the truth. SMS is used for far more than messaging. Person-to-app (P2A) services such as ticketing, travel services, payment, banking, voting, donations, marketing, reminders (for a start!) all make use of the humble SMS. In fact, from 2010 to 2012, global SMS messaging increased by 11% (Forrester 2013)), mobile ticketing shot up 50% (Deutsche Bank 2012), SMS payment increased by 61.2% (Deutsche Bank) and SMS held 51% of the overall mobile payment share (Gartner 2012).

And let’s not forget about application-to-person (A2P) messaging. It was only in December last year that tyntec predicted the explosion of A2P messaging. Being in the business ourselves, and seeing the data we see, we have to agree. App developers – including ourselves – are looking more and more into using SMS as in app push notifications to engage, drive downloads, and ensure communication no matter if the end-user is using data or not. Juniper Research even predicts that A2P SMS will over take P2P SMS by 2016, exceeding $70 billion in revenue, while Transparency Market Research predicts that the global premium messaging market will reach 1,134.2 billion by 2017. Not half bad for a technology whose death is currently being heralded…

One more aspect worth discussing is security. Chat apps open up a myriad of potential problems that don’t exist with SMS. For example, you never can be 100% of where your message is going – or who it’s going to. Send an SMS within your country’s borders and it’ll stay within telcos in that country. Send an app message and, well, it could be going anywhere before it reaches its destination. This opens up the possibility of being sent attachments and images that you really don’t want to be sent. Our mobile operating systems are still brand new and wide open to virus attacks that are easily sent via a malicious chat message. Think of it as an email virus – open systems, like email and app messaging, are hotbeds for criminals, and if your phone gets hacked, just think of what’s to lose.

While it’s true that smartphones are becoming more prolific (having just out-shipped feature phones for the first time by 1.6%), it must be remembered that the vast majority of these phones head towards developed countries – there is a gigantic feature phone market that relies on the simplicity and reliability of SMS. Just try telling Africa that SMS is dead when Google just launched an SMS version of Gmail, and when micro-payments, education and healthcare are all (partly) carried out via SMS.

Feature-phone-africa

At one point in the relatively distant future, when materials, shipping and data become cheaper and cheaper, we’ll most likely see the end of the feature phone, but one thing’s for sure, it’s not happening tomorrow.

For more information:
Lara Mulady
Online Communications Manager
+45 5045 2396
lmu@unwire.com

*Of course, this varies as to what country you’re in, what plan you’re on, and what carrier you’re with, but whatever the case, carriers aren’t going to let a few apps ruin them.

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