Over at Mobile World Live, Matt Ablott wrote a great post about how the decline of SMS in mature mobile markets in Europe is driving carriers to rethink their profit structure. As we’ve reported on several times, the appearance of new “non-text” messaging options, like Apple’s iMessage which allows Apple device users to message one another directly, bypassing their cell provider’s paid texting service, is putting a crimp in a very lucrative profit sector for carriers.
However, this is good news for a telecom manager, as these new services help reduce telecom expenses. Anywhere you can cut costs and shift to a low-cost or free service, in place of a paid, is a smart move.
The beginning of the end for SMS?
SMS was the original “killer app” for mobile. In terms of the volumes involved and the revenues generated, it is arguably one that has never been bettered. According to the ITU, there were a staggering 6.1 trillion SMS sent globally last year, a figure that has tripled since 2007. Assuming an average cost of US$0.07 per message, the ITU reckons that SMS traffic generated about US$14,000 every second for operators in 2010. Not bad for a service that was originally designed simply to push network notifications to SIM cards.
But is the SMS cash cow about to be put out to pasture? That appears to be the conclusion to draw from recent data from mature mobile markets, which shows that SMS volumes have started to decline as users switch to third-party messaging services such as Whatsapp, BlackBerry Messenger and Skype.
Such services have gained traction in line with rising smartphone penetration. Many to date have been word-of-mouth hits – but the recent launch of similar services by the likes of Apple and Facebook could mean their impact could soon be huge, putting operator SMS volume and revenue at serious risk.