Will Over-The-Top instant messaging services replace SMS? Whatsapp, Ping, Touch / PingChat, Kik, Cnectd, Skype: when it comes to instant messaging there is plenty of choice. And IM is hugely popular among savvy smartphone users. It would be interesting to see penetration rates among other user demographics. Feel free to send to @NetsizeGuide or @NetsizeCorp.
Security and privacy are yet another topic. What does your favourite messenger state about it in its terms & conditions? How about delivery reliability?
Sure, IM is free. But instant messaging still has some way to go and grow to become as ubiquitous, and perhaps even as versatile, as SMS text messaging. Do you share this view? Will IM replace SMS? Or will they continue to coexist, each having their own type of use and addressing a different need?
Can IM replace SMS? This question was asked by one of the visitors to the Netsize Insights blog site this week.
An interesting question. Instant Messaging has indeed become very popular. Blackberry users were among the first to adopt mobile IM, and use the RIM Blackberry messenger to easily exchange messages with other users.
This, combined with cheap flat rate subscriptions is the main reason why youngsters have been flocking in large numbers to this device. Being able to reach all your friends and classmates and exchange virtually unlimited numbers of messages is an offer that is hard to resist. Ping and Whatsapp followed.
While true for the developed world, it is different for developing countries. Smartphones with instant messengers are generally not available with affordable flat rate bundles or prepaid schemes. Smartphone penetration is still low. The only viable method of instant messaging in developing regions therefore remains SMS texting; it reaches everybody, it is cheap and easy to use, and works reliably. Until smartphones become cheaper, mobile internet more common and data bundles more affordable this is not likely to change. The ball is in the court of the mobile network operators.
There are other aspects that we need to look at as well. SMS has found a great number of enterprise applications, not the least of which is security. SMS messages are used for sending One Time Passwords (OTP) and PIN codes. Service and support is another area where SMS text messages are heavily used. CRM applications confirm appointments, and send notifications and alerts. Industrial systems control machines and equipment through binary SMS messages. All these applications use the SMS channel for its connection reliability.
SMS works, even in areas where the radio signal is weak and a mobile data connection is not feasible. Since SMS message termination is free on most (if not all) mobile operators, SMS messages are delivered to the user’s mobile phone even when the monthly data bundle has already been fully consumed.
A further aspect is security. Telecom regulation worldwide forbids mobile network operators to inspect SMS message content. Many operators don’t even have the infrastructure that allows them to store the massive volumes of traffic passing through their networks. They’re just not designed that way.
But can the same be said of Instant Messaging traffic? Isn’t the business case of Over-The-Top players founded on the necessity to build user profiles and exploit the data – that some would consider as privacy-sensitive. As a popular saying goes, “if you’re not paying for it, you’re the product.”
So while the case might be made for a substitution of SMS by IM for Person-to-Person messaging, for cases such as Application-to-Person communications and Machine-to-Machine the SMS channel still provides a unique value that would be hard to obtain using IM alone.
A few days after my article on SMS versus OTT (Over-The-Top) messaging on this blog, Portio Research published their latest Mobile Factbook. The pocket book provides a brief, start-of-2012 snapshot of the worldwide mobile industry.
In line with our own observation of the messaging market Portio concludes that SMS is not dead. Far from it: over the next five years SMS revenue is forecast to dominate worldwide messaging. Total SMS volume grows at a rate of some 4%, from 7.8 trillion in 2011 to 9.5 trillion messages in 2016.
But whereas Informa estimates Instant Messaging volume to reach 7.7 trillion messages in 2016, Portio expects we will be swyping and thumbing a mind-boggling 20 trilllion OTT messages worldwide.
This is, on average, over 4,000 SMS and OTT messages per person per year, by everyone on the planet. Optimistic? If Portio’s forecast turns out right, we might be seeing a few more cases of Repetitive Thumb Injury.
Reams have been said about the so-called demise of SMS. The smartphone has killed text messaging. Everybody is on WhatsApp. Why SMS when instant messaging is free? How soon will IM replace SMS?
The smartphone and app trends are indeed undeniably strong. In the past few years smartphone sales have grown considerably, reaching an overall penetration of up to 40 percent in Western markets and an amazing 77 percent in Singapore. Tablet PCs are the newest rage. In developing markets the feature phone is still king and smartphone penetration rates currently reach 5 percent at best. But at the same time developing countries show the highest rates of growth.
As we wrote in the Netsize Guide by Gemalto (free download to get market statistics and more), these new devices are changing and extending our mobile and online lives.
Yet SMS messaging traffic is holding surprisingly strong.
In its latest analysis on the global messaging market, Informa Telecoms & Media forecasts 9.4 trillion SMS text messages to be sent in 2016, representing an increase of 19% year-on-year since 2011 (1).
Mobile instant messaging is growing at a rate of 37% per year. It will represent some 35% of messaging traffic in 2016.
At a deeper level SMS is keeping pace with the total messaging volume growth.
If we zoom in on Application-to-Person and Person-to-Application SMS traffic, which according to Informa represents some 4.5 percent of the total SMS messaging volume in 2011, we see a healthy average year-on-year growth of close to 18 percent, to 6 percent of total SMS volume.
This comes as no surprise. Enterprises know that the only way they can reach 100% of the population is through SMS. Unlike PCs and email, a mobile phone is not shared. No matter what device is used, a simple feature-phone, a high-end smartphone or a SIM-equipped tablet, companies can reach customers with personalized text messages.
(1) Source: Informa Telecoms & Media, Despite incursions from OTT providers of IM services, SMS retains dominance in messaging revenues and traffic through 2016, April 2012
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Posted by Alexander Vlasblom 
This, combined with cheap flat rate subscriptions is the main reason why youngsters have been flocking in large numbers to this device. Being able to reach all your friends and classmates and exchange virtually unlimited numbers of messages is an offer that is hard to resist. Ping and Whatsapp followed.
Yet SMS messaging traffic is holding surprisingly strong.
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