Analyst rings death knell for SMS

Mobile IM to take over

Ian Williams, vnunet.com 06 Nov 2007

Mobile operators cannot rely on revenues from SMS growing at the same pace into the future, analyst firm Ovum warned today.

Despite the recent announcement from the Mobile Data Association that UK mobile subscribers are now sending more than one billion text messages a week, John Delaney, principal analyst at Ovum, predicted a slow down.

"Even if SMS traffic keeps growing at current rates into the future, mobile operators cannot rely on revenues from SMS growing at the same pace," he said.

Delaney noted that, although the UK has been a saturated mobile market for several years, and growth in mobile voice usage is slowing down, text messaging continues to defy gravity.

"Growth in SMS traffic in the UK has been describing an almost perfect straight-line graph for the whole of the 21st century and shows no signs of slowing down," he said.

Despite this growth, Delaney warned that mobile operators need to plan now to deliver a new type of service that can have the same kind of mass-market appeal as SMS, and that can inject new growth into mobile messaging revenues.

Allen Scott, general manager at communications developer NeuStar NGM, believes that mobile instant messaging (IM) is the way forward as it allows consumers to do so much more with their phones.

"Next-generation messaging will act as an easy-to-use communications tool and control point for users," he said.

"Mobile IM acts as a plug-in to other applications and services such as social networking, music sharing and dating.

"This is partly because of the awareness many users have of PC-based IM, and partly because of the viral nature of the service.

"But mostly it is because users already understand the benefits of messaging and recognise that mobile IM takes SMS to a new level with the added benefit of presence information."

Scott warned companies considering mobile IM services to make sure they are marketed effectively and priced appropriately in order to maximise consumer appeal.

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