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.