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It's easy to forget about SMS these days. After all, the rise of the smartphone has seemingly made SMS text messaging a thing of the past for many mobile phone users.

But is that really the case? Are smartphones marginalizing SMS to the point where it might be called effectively dead?

SMS generates a staggering $100bn-plus a year for mobile carriers and some estimate that SMS revenue will continue to grow. On the other hand, one research firm has estimated that carriers lost some $14bn in SMS revenue last year as consumers turned to alternative messaging services and there are plenty of reasons carriers might not be sleeping as soundly today.

So who is right?

According to Andrew Bud. who was previously the CEO of mBlox and is now the global chair of the MEF, SMS is far from dead. In an interview conducted by TheNextWeb, Bud claimed the idea that SMS is on its way out "is very far from the truth." He explained:

...for B2C, SMS is alive and well; our SMS business even grew by 19% year-on-year between 2011 and 2012. Even in Europe, which is supposed to be a low-growth market hit by the financial crisis, it increased by 29%.

That's obviously good news for carriers, which have cashed in big time on SMS. And the news may get even better for carriers. That's because carrier billing produces conversion rates five times higher than credit card payments, leading Bud to call carrier billing "the key to content monetization on mobile devices." Because of this, Bud sees carrier billing as being "a very important part" on the burgeoning business of in-app purchases. Possibly lending credence to this notion: Google announced carrier billing in the Android Market in late 2010.

Obviously, carriers will face greater competition as the mobile ecosystem matures and consumers are given more options for messaging and payment. But there's no doubt that carriers, like them or not, are positioned to continue playing a large role.

Patricio Robles

Published 14 March, 2012 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2381 more posts from this author

Comments (4)

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Douglas McDonald

I think there will remain some "bastions" of SMS, such as carrier billing for some time. However, as your article mentions there a large number of options emerging for mobile payments, many of which reach out further than just mobile which may prove more compelling for users. For B2C the use of SMS has mirrored P2P usage - everyone uses SMS so it's not strange to get opted in messages from brands you like. If the ponly messages you get via SMS are from brands, will that make them less popular?

In the broader P2P messaging market (at least in more devoped countries with higher smartphone usage) the only thing that is protecting SMS is blanket interoperability between carriers. The carriers are going to make an attempt to compete with products like Whatsapp - but I fear that they will fail through lack of focus and a desire to transfer SMS revenue to the service.

over 4 years ago

Nico Koepke

Nico Koepke, CEO at KODIME LtdSmall Business

Agree with Andrew. It's a bit like saying Email is dead because we have websites. The kind of uses for SMS to improve deliverability (example password retrieval, my pet hate being the sentence "just check your junk mail filter"), vouchers, CRM, health care programs etc is still at its start. SMS is increasingly part of social, with status updates, and two-way SMS for reliable and instant consumer interaction - not everyone has an iPhone yet, and even those that have, still text.

Whatsapp and the like will no doubt continue to make inroads and hit overall SMS traffic somewhat, but again it's like saying Skype means no more landlines and mobiles - it's not that black & white. Skype for example are actively pushing their SMS features inside the software.

Re the billing side, I think it's a bit more problematic - the misuse of premium SMS by ringtone, chat, TV voting has made the consumer sceptical, and on the business side the ridiculous cuts % the mobile carriers take from each transaction means it is not worth anybody's effort except for small digital items, and even there in-app purchasing is often more attractive.

over 4 years ago

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Alec East

This is a particularly pointless article.

Putting aside the tired and clichéd use of the "[insert technology here] is dead!" title format, of course SMS isn't dead. Who said it was? No-one in the industry was asking the question because everyone knows SMS is going to be with us for a long time, not just because of its unparalleled user-base & reach but also because its uses are expanding as more people use more online services from online banking to redeemable vouchers.

This article smells more of poorly masked PR for "Andrew Bud. who was previously the CEO of mBlox and is now the global chair of the MEF" than it does of any genuine or relevant reporting.

Really, eConsultancy, you should try a bit harder.

over 4 years ago

Michael Rolfe

Michael Rolfe, Digital Marketing Executive at Koozai Ltd

Hi Patricio, I beleive a fair appraisal is to say that SMS is evolving.

One comment i remember regarding was that when your baby grows up, it doesn't die, it evolves.

'X is dead' posts will continue to be crowd-pulling and debate-fanning titles, so I'd just like to add...

As far as I know, consumers are sending more SMS via IM apps but then more SMS is being sent as a whole, and more business SMS is being sent too: here's an infographic: http://www.textmarketer.co.uk/blog/2012/01/business-sms/the-rise-of-business-sms-infographic/

As businesses incorporate more SMS based communication, smartphones develop voice recognition texting, and the world keeps growing I would expect SMS use to grow.

over 4 years ago

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