The Staggering
Success of SMS: 1 trillion SMS messages worldwide in
2005
Mobile Messaging
As an industry sector, messaging on mobile phones
only began in the second half of the 1990's. In the
space of just a few years, mobile messaging has become
an immense global industry generating over $55 Billion
US Dollars in 2005. The largest portion of this revenue
comes from simple SMS, worth an estimated $35 Bn USD
in 2005. Since hitting mainstream use in Western Europe
in 1999, SMS has quickly grown to the levels we see
today with an estimated 1 trillion SMS messages worldwide
this year.
SMS owes its success to its simplicity – it
is quick, easy, private, discreet and inexpensive.
Since the first commercial SMS services started gaining
ground in the late 1990’s, the texting phenomenon
has grown to epic proportions and in 2005 it looks certain
that we will see global SMS volumes exceeding 1000 billion
messages. In a similar timeframe, in the wireline world,
person-to-person email has grown from a standing start
to traffic levels which The Radicati Group expect to
reach a staggering 16,000 billion email messages transported
worldwide this year (not counting spam). Just 15 years
ago electronic messaging was no more advanced that the
fax machine, now the world is awash with written communication
in mind-numbing volumes never before seen. Ironically,
in an age when our children, sadly, read fewer books
than ever before, written communication has suddenly
become popular again, replacing verbal communication
in many instances.
In the mobile world, SMS has also become a lucrative
‘accidental hero’, buoying up operator revenues
as voice becomes ever more marginalized. Worldwide,
during 2004, SMS generated revenues in excess of $30
Billion US Dollars, and we forecast that figure to grow
to a fraction over $50 Billion US Dollars by the end
of this decade. A fair portion of that growth will come
from increasingly innovative uses for SMS in mature
markets, such as TV voting, information services and
almost endless other new applications for SMS coming
to the market. However, much of that growth will come
from a widening user base, some in North America and
Eastern Europe, but the majority of it in low-income
markets where predominantly prepaid subscribers find
SMS an essential low cost communication medium. The
emerging markets of Asia, Latin America and, to a lesser
degree, Africa, look set to eat up SMS in great volumes
over the next 5 years.
Why SMS?
SMS is a very simple tool for passing on a piece of
information - “I’ll be late home”,
"Meeting delayed 10 minutes", “Can you
pick the kids up from school”, “Meet me
in the coffee shop in 20 minutes”, etc. This basic
communication activity was always served by voice before,
but SMS has shown the world an even quicker, cheaper
and easier way of communicating these short ‘info
bites’ and hence SMS has enjoyed widespread acceptance
for it. This usefulness has built the success of SMS,
the value proposition of SMS to the end user is hard
to beat – in fact there has never been a quicker
or cheaper way for two people in different places to
communicate with one another easily, discreetly and
almost instantly.
SMS is penetrating and permeating into every area
of our lives. As an example of the ubiquity of SMS,
the Mobile Data Association in the UK reported that
on New Years Day 2005 in the UK, Brits sent a staggering
133 million SMS messages, and on Valentines Day 2005
in the UK, 92 million SMS messages were sent, compared
to an estimated 12 million traditional greetings cards
sent in the post. These figures demonstrate an obvious
opportunity for simple SMS messages to evolve into MMS
animated greetings cards that will surely develop into
a mass market product soon. The opportunity to send
mCards the way e-greetings have taken off in the wireline
environment represents a no-brainer in MMS development,
and giants of the greeting card industry such as Hallmark
and American Greetings (AGmobile) are already offering
such services.
This level of consumer acceptance for SMS shows how
quickly a relatively new technology (SMS is only just
over 10 years old) can become so well accepted. SMS
marketing, SMS parking schemes, traffic alerts, ticketing
and voting and competitions, reminders to take your
medication for out-patients, field-worker updates and
alerts, remote logging on and off of jobs for field
workers, stock price updates, shipping data, package
tracking, travel alerts, the list is almost endless.
Some companies, such as Telsis, now offer text-for-business
services such as text forwarding, out-of-office text
replies and more, increasing the functionality of SMS
as a business application. The old complaint that SMS
is limited by its 160 character limit is no longer valid,
since concatenated SMS messages are now widely used,
and the argument that the user interface is clunky seems
irrelevant in a market where MMS, mobile IM and mobile
email (except on BlackBerry and PDAs) all use that same
interface.
Will SMS be replaced by newer messaging technology?
As various new technologies are emerging it is likely
that some of these SMS applications listed above will
be replaced by RFID or GPS or other M2M communication
systems, but there remains a vast array of services
that SMS can deliver cheaply and simply, and SMS itself
is growing as a bearer for M2M communications. This
all demonstrates the great future potential of SMS,
still growing fast now and set to keep growing for several
years to come. It is true that by 2010 other messaging
technologies will probably start to replace SMS in mature
markets, but with the growing mobile subscriber population,
particularly in emerging markets, SMS still has at least
10 healthy years ahead as a messaging technology with
worldwide acceptance.
No other non-verbal form of communication in the world
is used by so many individuals across so many countries,
and no other messaging medium is experiencing such rapid
expansion of its user base. SMS is, and will remain
to be, an awesome revenue generating business success
story. For mobile network operators, SMS will remain
the prime non-voice revenue generator worldwide, and
any players who ignore this basic service to focus entirely
on future developments, does so at their peril.
For more on SMS and other mobile messaging
technologies, see our report Mobile
Messaging Futures 2004-2010
Disclaimer:
Portio Research Limited.
Published 2006 by Portio Research Limited. © Copyright
2006.
www.portioresearch.com
info@portioresearch.com
Disclaimer and Legal Notices.
Disclaimer. Every care has been taken
in the preparation of this report to ensure that the
information contained herein is accurate, factual and
correct to the best of our knowledge, at time of publishing.
All opinions, suppositions, estimates and recommendations
included in this report are solely the opinions of the
authors unless otherwise stated. Portio Research Limited
accepts no liability for any loss or damage or unforeseen
consequential loss or damage arising from the use of
the information contained within this document. The
opinions, suppositions, estimates and recommendations
within this report cannot be guaranteed, and readers
use this information at their own risk. The information
published in this document is subject to change without
notice at any time, and Portio Research Limited accepts
no liability or obligation to inform the reader of such
changes.
Portio Research Limited do not promote or endorse any
specific companies or products, the views and opinions
we express in this report are wholly our own assessments,
and independent from any external interest or influence.
Many terms and phrases and trade names used in this
document are proprietary and Portio Research Limited
recognises and acknowledges that all trademarks are
copyright, belonging to their respective owners. Where
possible, this document accords such terms and phrases
and trade names to their respective owners.
All Rights Reserved. No part of this document can be
copied, shared, redistributed, transmitted, displayed
in the public domain, stored or displayed on any internal
or external company or private network or electronic
retrieval system, nor reprinted, republished or reconstituted
in any way without the express written permission of
the publisher.
For reprint permission or for other requests, please
contact Portio Research on info@portioresearch.com
|
