News24

Free message apps 'killing' SMS

2012-10-11 10:00

Singapore - Global telecom operators are expected to have lost $23bn in SMS revenues by the end of 2012 as smartphone users shift to free messaging applications, an industry report said on Thursday.

Technology research company Ovum forecast the cumulative losses would reach $54bn by the end of 2016 as the traditional Short Messaging Service (SMS) gives way to internet-based platforms such as WhatsApp.

"Social messaging is becoming more pervasive and operators are coming under increased pressure to drive revenues from the messaging component of their communications business," said Neha Dharia, consumer telecoms analyst at Ovum.

"Operators need to understand the impact of social messaging apps on consumer behaviour, both in terms of changing communication patterns and the impact on SMS revenue, and offer services to suit."

Ovum cited the increasing popularity of WhatsApp, which allows smartphone owners to exchange messages for free using wireless internet links, bypassing SMS gateways that charge users per message or for a monthly quota.

"Ovum believes this level of growth will continue as smartphone and mobile broadband penetration increases and expects smaller players such as texPlus, Pinterest and fring to cause further disruption in the messaging space," the report said.

Urging telecom operators to innovate, Ovum said the increase in the number of players offering social messaging services is not a short-term trend but a sign of a "shift in communication patterns".

Text messaging started as a way to use spare telecoms capacity but became a key cash generator for operators while offering users a cheap way to keep in touch with friends and family without having to spend on phone calls.

Ovum said in June that SMS contributed about 57% of non-voice revenues for telecom companies globally in 2009 but this is projected to fall to 47% this year.

Comments
  • neo.khemisi - 2012-10-11 10:20

    Just like it did with letter,envelope

  • gary.youell - 2012-10-11 10:22

    They make it up on data fees 10 fold...

  • dean.mark.williams - 2012-10-11 10:26

    the whole idea of 4G/LTE is to move away from voice and strictly into data for communication. hence the need for SMS is redundant. even making phone calls will start to change with Skype and other free voice calling software being available for smartphones.

      leon.breukelman - 2012-10-11 15:50

      Sure, this might be true for smart phone owners. Fact is that there are many message apps and they do not interconnect. The only facility to reach all mobile phones is still SMS. As private users with smart phones we will move away from SMS but for business that needs to be able to communicate with every mobile device the power of SMS is just being realized.

  • gerhard.nel - 2012-10-11 10:29

    WhatsApp!

  • henk.vanrensburg.31 - 2012-10-11 10:30

    Shame I feel for them!

      malcolm.naidoo.12 - 2012-10-11 11:22

      lol

      DuToitCoetzee - 2012-10-11 11:26

      Yes, like they felt for the envelope and stamp makers. lol.

  • punktuasie - 2012-10-11 10:30

    So what? What do I care what their profit is, in billions of dollars? It's supposed to be about the users, not the providers. They're still ripping us off.

  • terry.burne - 2012-10-11 10:31

    The use of BBM and Whats App has come about because operators have jacked up the cost of SMSs to ridiculous. Why do SMSs cost so much - it is the same data that is being sent surely?

      justin.pretorius - 2012-10-11 11:17

      INDEED!! I cannot believe the cost of telecoms in SA - this is a barrier to doing business in SA

  • Eterni80 - 2012-10-11 10:45

    do you see the worry in my eye ? large corporations have always over charged to feed the fat cats at the top - screw 'em !!

  • raven.sqarr - 2012-10-11 10:53

    Let us take 50c as an average cost per sms which is 160 bytes worth of data, then the operators charge us R3,200.00 per meg of data!! And people wonder why no-one wants to use this ridiculous service.

      mario.dippenaar - 2012-10-11 11:12

      Worst is that a SMS is "piggy backed" the data that a cellphone must submit every few seconds anyway. It literally doesn't cost them anything!

  • niel.dino.33 - 2012-10-11 11:03

    Notice how they only mention the revenue they wold lose but make no mention of the profit!. That would be a clear picture of what their PROFIT margins are.

  • afrikeni - 2012-10-11 11:22

    Why do people keep on saying internet based stuff is free when internet data is killing you when using the app? Hell, you even pay for Blackberry Internet Service, so what's free?

  • captaine.morgan.90 - 2012-10-11 11:23

    Deal with it !!! Greedy bunch.

  • pamela.jacobs.509 - 2012-10-11 11:28

    Shame, poor little service providers. After 10 years I still have to stand outside my house for signal...

  • kingswing69 - 2012-10-11 11:30

    but they making money on data packages now so we are still being raped even with high costs of fees

  • stephenballot - 2012-10-11 11:43

    Ovum said that 47% of non-voice revenues to operators/carriers will come from SMS... duh. Where is the death??

  • coenraad.vanderwesthuizen.3 - 2012-10-11 12:06

    Feeling sorry for any Service Provider for losing money because of this is like feeling sorry for your rapist for getting caught.

  • michael.rebeiro - 2012-10-11 12:54

    SAn'a telecoms suck yet the public (who fuel it and give them their profits) are blissfully acceptant! Yes we live in the information age but all the more reason for it too be affordable!!!!

  • Doep100 - 2012-10-11 14:40

    WOW, do people still SMS? It's so limited and I think it has outlived it's original purpose long ago.

  • Bob.Cee123 - 2012-10-11 14:58

    Shame, the poor cell phone bosses can now only afford silver plated Learjet 35s instead of gold plated GulfStream IVs. The poor things......

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