Why Apple’s iMessage is set to kill the SMS industry stone dead

Ok, I admit it: That headline was for effect. I know Tomi Ahonen (“Mr SMS”) would have a heart attack if he thought I was serious.

I do however know a lot of people in the SMS marketplace who are rather concerned by the assumption by many (especially those in Silicon Valley) that SMS is all but dead. The received wisdom is that iMessage is the way ahead. This wisdom does have a way of spawning a self-fulfilling cycle — witness, for example, the Silicon Valley viewpoint a few years back that Nokia was dead. The Valley collectively helped make this true, by — in some cases — actually refusing to develop for the Nokia platform.

There’s quite a few problems with the ‘SMS is dead’ viewpoint, not least the fact that everyone you communicate with MUST have an iPhone in order for iMessage to be vaguely useful. There are legions of Android users in the Valley so I wonder just how well the viewpoint will stay alive across the next few months.

SMS still has a part to play in the marketing mix and, fundamentally, if you need to contact someone with a message (and you don’t know/care what device they’ve got), text messaging is the way ahead.

I wonder how much damage iMessage will do to the mobile operator business model? In the short term, not much, I don’t think. I’ll need to look closely at how the medium works. If, for example, you try to message someone on another iPhone, will Apple automatically route that message via their network rather than SMS? That would certainly be stimulating. Or do you need to actually decide to use the medium? This is a little unclear to me as I haven’t looked at it in-depth.

The challenge with SMS from an operator standpoint is that it will become increasingly difficult to justify the ’10p’ (or, in some cases, 12p+VAT) per message charge. I’m excited to see how consumers react: Will they, for example, decide to buy smaller text bundles in future.

What’s your view?

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13 Responses to Why Apple’s iMessage is set to kill the SMS industry stone dead

  1. Anonymous October 12, 2011 at 7:36 pm #

    I don’t think it will hurt much at all, apple is like only 5% of the cellphone market, many 3rd world countries rely on text, plus as u stated its ios to ios, and there are tons more android users out there, plus bb, symbian ,windows ect…

  2. Kip Hakes October 12, 2011 at 7:40 pm #

    SMS will probably subside, as more people can e-mail and IM through their phone.. Will iMessage kill it? No. Of course not. Not everyone has or wants to own an iPhone.

  3. Mark Watts-Jones October 13, 2011 at 12:55 am #

    iMessage does exactly what you suggest – when you type a message iMessage pings the recipient, sees if they have an iOS 5 device and if they do it automatically sends by iMessage, if they don’t it goes by SMS. On that basis alone iMessage will substitute most SMS between iPhone users and that’s before considering the feature advantages of iMessage – sending photos, group messages, delivery receipts etc…

    But of course not everyone has an iPhone and SMS is pretty much ubiquitous so SMS will be around for sometime to come.

    That said we’re probably seeing the start of consumers changing relationship with SMS as they find alternatives. First BBM, now iMessage. But there’s also Samsungs ChatON, whatever Android do and how Nokia/Microsoft implement Skype/GroupMe. In a few short months every smartphone OS could have a native messaging alternative to SMS and that will start to substitute SMS. These messaging systems will initially probably not be interoperable so they’ll be complementary to SMS.

    Net result of all of this is likely to be lower demand for SMS and more demand for smartphones and data but we know that already so it’s nothing new!

  4. Ewan October 13, 2011 at 3:50 am #

    Excellent analysis!

  5. Ewan October 13, 2011 at 3:50 am #

    Aye

  6. Anonymous October 13, 2011 at 9:05 am #

    For anyone that has a newer apple dedicate carriers will loose as much as 50percent of their sms revenue I think

  7. tony swales October 13, 2011 at 10:10 am #

    1.SMS usage is already dramatically down due to similar apps.
    2. You don’t need “everyone you communicate with MUST have an iPhone in order for iMessage to be vaguely useful” People will just choose SMS or iMessage depending on who they communicate with. (i.e. SMS for your friends with androids and imessage for your iphone friends.
    3. Did you not say in a post a while back you wanted your SMS to be available in multiple places? Will I assume imessage can or could do this.

  8. Najeeb Khan October 13, 2011 at 12:49 pm #

    I think what’s true is that instant messaging over IP is eventually going to drive the use of SMS downwards.
    iMessage is great if all the people in your messaging circle use iOS but most people have friends/relatives/colleagues on iOS, Blackberry, Android, etc. So any solution needs to be cross-platform to really drive SMS downwards even more. I use WhatsApp because it is available across a variety of mobile platforms and because you can send pics, video, etc easily too. Having said that the reliability of data connections whilst you’re on the move is often not great and SMS can be sent even when your signal is really poor.
    Let’s not forget that operators are trying to thrust RCS-e onto handset manufacturers in another vain attempt to control comms standards – and therefore the monetisation of them. Prats.

  9. Ewan October 13, 2011 at 1:28 pm #

    Absolutely right about point 3 in particular!

  10. ssɐqouuoſ October 13, 2011 at 1:28 pm #

    Nokia is not dead.. I see a Nokia banner ad above this post.. 🙂

  11. Ewan October 13, 2011 at 1:36 pm #

    Ah interesting point!

  12. Kyith October 13, 2011 at 1:55 pm #

    they have to come up with it fast though. but i got a feeling they cannot dethrone whats app.

  13. Giff Gfroerer, i2SMS October 13, 2011 at 2:28 pm #

    Ewan, a few thoughts here.

    1) Many from within the SMS business have long argued that the high costs and prices for SMS, both on the short code side and then on the receiver’s end, would cause competing industries to find a way around SMS.  Maybe this will be a wake-up call for the carriers and those in charge of short codes to lower their fees or face being put out of business.

    2) A valid point was made when you tried to figure out what iOS will do with the non iOS phones.  Now, they could connect to Blackberry Messenger and the soon to be Samsung Messenger by trading APIs with such, (and I do think they will do this), but then what about all the other devices?  What about those that haven’t updated their phones yet?  What about non-smartphones?  This will take years and years to work through.

    3) If you are trying to give alerts to your consumers, how do you justify only sending alerts to those with an “updated” OS?  Once again, this spells years and years to come of SMS.

    If I was the carriers charging for SMS, or the governing body of short codes, I would look very carefully at the future of messaging and make sure I had a plan for 3-5 years out.  If they don’t they certainly could be losing their cash cow.  Why continue to over-charge for a service now, which just spurs developers like Apple to find a cheaper way to do something we all know costs fractions of a penny per message?

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