Phone companies missed out on $13.9 billion last year as more people opted to send free texts through SMS (short message service) applications like Blackberry Messenger and Facebook Mobile Messenger, according to a report. This follows a $8.6 billion loss in phone company provided text revenues in 2010. Mashable reports.
SMS revenues are down as people communicate through chat boards and within other applications like Words with Friends. Mobile communication is also surging on Facebook, Twitter and smartphone email clients.
The Ovum report estimates that there will be further losses in profit if the “legacy services” — big phone companies companies — don’t start investing in bringing new and improved services to the table.
Social messaging applications cost mobile network operators $13.9bn in lost SMS revenue last year, according to Analysis firm Ovum which studied global use of popular services like Whatsapp, Blackberry Messenger and Facebook chat. The BBC reports.
However, the study did not factor in the extra income networks received from mobile data costs because of increased internet usage resulting from social messaging.
A study conducted in April 2011 by research firm Comscore suggested that 4% of UK smartphone users had sent a message on Whatsapp that month.
Another survey, carried out in June 2011 by YouGov, showed that the huge majority of smartphone users - 81% - still considered SMS the key way to send messages on a mobile.
Nevan Mrgan, an app developer for Apple’s mobile operating system, saw a noticeable decline in the number of standard text messages he was sending almost immediately after Apple rolled out iMessage on Oct. 12. [via Bits]
... Although the number of text messages sent by cellphone customers in the United States is still growing, that growth is slowing, and many analysts expect that it will gradually taper off. Countries like Finland and Hong Kong are already seeing serious shifts in the number of text messages their cellphone customers send.
AT&T and Verizon did not immediately respond to requests for comment on whether they were noticing an impact on their businesses.
The latest idea from the co-founder of Hotmail is a mobile application that will allow users to send text messages to any mobile in the world for free. The Wall Street Journal reports.
The application – titled JaxtrSMS — is available for all phones which have data plans, including the iPhone, BlackBerry, Nokia and other phones which are based on Android or Java platforms. The application is available to users of all phone service-providers.
JaxtrSMS allows text messages to be sent to phones which don’t have the JaxtrSMS application. “You don’t have to know if the recipient is on our network or not,” said Mr. Bhatia though to reply to texts requires downloading JaxtrSMS.
GigaOM reports on the phenomenal and quiet success of WhatsApp.
WhatsApp is the number one paid social networking app in the Apple App Store, and has more than 10 million downloads on Android with 369,270 user reviews, more than almost any other Android communication app.
It’s used in 250 countries on 750 networks. While the market has consolidated, WhatsApp has kept its head down and continued to execute.
WhatsApp charges 99 cents on iOS and $1.99 on other platforms for three years, with the first year free.
The carrier cash cow of SMS text messaging is on the wane, driven by third-party messaging apps that include BlackBerry Messenger, iMessage, Skype and others. GigaOM reports.
As the future of SMS changes, it’s worth considering who might stick with paying for it a decade from now. Martin Sauter over at WirelessMoves says there may still be a market in his excellent post on the topic.
Perhaps SMS will become or remain an alternative for people who like privacy and services that don’t store and analyze messages for targeted advertising, building social graphs, etc. After all, unlike for web-based services for which users don’t pay anything and are in fact NOT the customer but only a source of information that can be monetized and on top give up some of their privacy, for the SMS service they might still be that: The customer, who pays for the service of sending and receiving messages, free from other needs of monetization such as selling information gained to third parties.
Watch favorite Tomi Ahonen in a video interview on how he sees the future of mobile. Text messaging is still very much in the picture (most of the world doesn't own a smartphone) and some great stats rattled off at lightening speed. via.
The upcoming launch of a group-messaging service by China Telecom next week means that all three Chinese mobile telcos now have free SMS/IM-like apps. [via Pen Olsen]
It’s a signal that the mobile networks see more profit in getting wealthier users on data plans – either GPRS or, preferably, 3G – rather than clinging on to the old SMS cash-cow.
Prep the intensive care unit and fetch the defibrillator, nurse! SMS is nearly dead! The LA Times says so, the Sydney Morning Herald says so, even The Economist says so. The Register reports on how this does not apply to Australia.
At a time when e-mail and many other forms of electronic communication are essentially free, wireless carriers are still charging as much as 20 cents to send a text message to a phone, and another 20 cents to receive it. The New York Times reports.
Paying so much to transmit a handful of words is starting to look as antiquated as buying stamps.
There are now a growing number of ways to bypass text-message charges using an Internet connection — much as Skype allows people to make calls without relying on a traditional telephone line. If these services catch on in a big way, analysts say, they could take a big bite out of the profits that text messages generate for wireless carriers.
On Wednesday, Apple plans to introduce a new service called iMessage, which could quickly become the biggest fish in this pond. The service lets iPhone owners send messages with text, photos and video to other iPhone owners over a Wi-Fi or cellular data connection. The service, part of an update to Apple’s iOS mobile operating system, will automatically handle messages sent between iPhone, iPad and iPod Touch users who have upgraded to the latest software.
The number of mobile text, picture and video messages sent worldwide will top 7.5 trillion this year, up 12.5% from the 6.7 trillion sent last year, according to Ovum. Smart Gorilla reports.
In a new forecast, the independent telecoms analyst also predicts that the market will generate revenues of $153 billion this year, up 8% on last year’s performance.
However, Ovum finds that the market will eventually slow, with revenues and message numbers starting to decline, as alternative messaging solutions from internet service providers, handset vendors and social networks make their mark.
AllThingsD reports that Skype - which is in the process of being acquired by Microsoft - has acquired GroupMe, a company that has developed a way for groups of people to send messages to each across various smartphone platforms. People familiar with the transaction say Skype will pay around $85 million for GroupMe.
For The Motley Fool, the deal is another nail in the coffin for SMS.
TheNextWeb, on how for the first time in its history, the text message is under serious pressure for a whole range of competitors.
The emergence of the smart phone, 3G networks and a range of new apps mean that SMS is feeling the heat and could be eliminated within the next 3 to 5 years. Here are some of the changes that are happening on the landscape of the SMS as we speak…
-- Apps disrupting the market
Blackberry has forced a huge sea change in the market and there are now multiple copycat apps for each platform including Kik and Whatsapp messengers.
-- Ironically, smartphones to blame
3G and WiFi connections are improving, the need to text one another traditionally is decreasing. We all use our smartphones to access services like Twitter and Facebook in a way that we never could have thought of 3 or 4 years ago and all those services are also competing with SMS now…
-- Fragmentation may save SMS
The reason that SMS works so well is because we all have a phone number and we carry that phone with us wherever we go. It doesn’t matter what sort of hardware we are carrying or what network we are on as we will always get the text message. Although the new messaging apps are all brilliant and mostly free they exist on different platforms and there is some serious fragmentation happening. Somebody on BBM can’t speak to somebody on Kik for example and for these apps to really work all your friends need to be on the same service which is a big ask.
-- Change will take 3-5 years
The notion of paying for SMS will seem completely alien in about 3 years time but it is important to think about all the people who don’t even have smart phones yet and a certain percentage of the population are more than happy with the SMS solution that they currently have. There is some serious fragmentation between apps and the various platforms and it will take one player to unify the whole experience. The are very strong economic reasons for a free app to succeed and it’s very much a question of when and not if at this stage.
Text messages used to be everything to the Generation Y. Though millions are sent each day, is the humble text message’s shelf life about to expire? ZDNet reports.
... With the vast swathes of social media, and all other forms of one-to-one and mass communication — even Skype and video calling — the text message has arguably become obsolete. Yet, having said that, it is still used by nearly a quarter of the world’s population.
Though Facebook Messenger wants to rid the world of text messaging for good, one of its crucial functions to increase its 750 million following is using the obsolete technology itself.
Text messaging still rakes in millions of dollars in revenue for U.S. mobile network operators. Operators arguably make more from data plans — which seem to be overtaking the text messaging ratio.
People use more data nowadays than they do in volume of text messages. Having said that, data under a set limit per month is free and inclusive.
... The two basic functions of any phone is to make calls and send texts. That’s it. There is barely a network-connected mobile device on the planet that does not send or receive text messages.
But as data-hungry applications, from instant messengers to social networking applications take over, there is no doubt that the days of the text message are numbered.
Arguably, one can say the same about email. “If we have Facebook, why do we still have email? We have Facebook email, after all”. Just because something appears to do more than what a previous technology did, does not mean that the technology is automatically discarded.
Text messages may be obsolete, but they are yet to become truly redundant. For now, I see text messages as ‘the ultimate fallback’.
While they still offer purpose, even if they are relegated to the ranks of the ‘last option available’, then I see no reason for them to fall into the floppy disk category of dead technologies.
AIM's downfall owes largely to the ubiquity of Facebook chat. And now, the company's going after the mobile crown—texting. Facebook Messenger will do text conversations, privately share your location, and beam around photos. To all of your friends.
Niche group messaging apps like GroupMe definitely have a reason to be worried.
According to Mark Suster, venture capitalist at GRP Partners, Cloud and digital media startups have a real chance to lead the next chapter of tech innovation. Group texting companies? Not so much.
Watch video for a detailed breakdown of how cloud and digital advertising are changing the tech industry.
Kakao Talk, a mobile messenger smartphone application, has enjoyed phenomenal success since it was launched 16 months ago and has spawned similar apps in the world’s most wired nation. The Express Tribune reports.
Almost everyone I know uses the service, and it’s so economical that now I can’t imagine how I’d keep in touch with so many friends without it,” said Hwang, 21.
Many Kakao devotees say they have stopped sending Short Message Service (SMS) texts since they downloaded the app, which allows users to send messages, pictures, soundbites and even video via the internet. The application is free to download, and sending and receiving material in wi-fi zones is also free.
The company makes part of its revenue from a commission on gifts which users can send to friends via Kakao.
... The application has been downloaded 18 million times worldwide in just 16 months, with 500 million messages being exchanged daily. Early this year Kakao also launched the application in English and Japanese.
Yesterday Google launched a field trial (by invitation only) social network called the Google+ project . One of the features of The Google+project allows for group text messaging.
In their own words:
Texting is great, but not when you’re trying to get six different people to decide on a movie. Huddle turns all those different conversations into one simple group chat, so everyone gets on the same page all at once.
And arstechnica's feature story entitled Inside Google+:
Google formally makes its pitch to become a major force in social networking with the unveiling of Google+ to a limited public beta. Some may wonder whether Google+ is just another questionable social effort by a company that has had a lousy track record in that space to date. But Google+ is not a typical release. It is a result of a lengthy and urgent effort involving almost all of the company's products. Hundreds of engineers were involved in the effort. It has been a key focus for new CEO Larry Page. And they aren't calling it a Facebook killer—but a better Google.
That's certainly the hope of London-based company Fring, which today launched an iPad group video-chat app. The service allows users to chat simultaneously with four friends, over Wi-Fi or 3G, and see friends on other devices including the iPhone and Android-based smartphones.
Wireless carriers could face some serious trouble if emerging trends in text messaging continue, a new report from the Wall Street Journal contends, reports Cnet.
Citing a recent study from the CTIA, the Journal pointed out that 1 trillion text messages were sent in the U.S. during the second half of 2010. That number, while impressive, was up just 8.7 percent compared to the first half of 2010, representing the smallest gain ever in SMS use.
The importance of text messaging on a carrier's bottom line cannot be underestimated. Referencing the UBS report once again, the Journal said that the average carrier makes an 80-cent profit on every single dollar it generates in text-messaging revenue.
The recent proliferation of instant messaging apps on smartphones and a glacial growth rate of text messaging volume could deal a serious blow to the wireless business, which has come to rely on the high profit margins of text messaging. AdWeek reports.
One could argue that the writing has been on the wall since the introduction of RIM’s BlackBerry Messenger service. But it wasn’t until Apple recently released a similar product, iMessage, for its iPad and iPhone products that the death of the text message loomed large. Google’s Android software is also reportedly working on a messaging service that uses the Internet, instead of wireless carriers, for message delivery.
... Cellphone users in the U.S. sent and received a whopping 1 trillion text messages in the second half of last year, but compared to the six months prior, the figure represents only extremely modest growth. Carriers charge anywhere from 20 cents per message to texting plans that carry price tags of around $20 a month. In comparison to monthly data plans and one-off data use charges, text messaging still reigns supreme in the profits department. The SMS cash-flow, however, may be short-lived.
According to MG Siegler for TechCrunch, one of the core new features highlighted in iOS 5, iMessages has one purpose: to kill SMS. And he thinks it's a good thing.
That is, traditional carrier-controlled text messages. iMessages will do this by replacing SMS with a service that Apple is in control of across all of their iOS devices. And here’s the real death blow: iMessages will be completely free.
Sure, you can argue that iMessages is limited due to the iOS requirement. But as Apple announced today, there are over 200 million iOS devices out there now. That’s a lot. Like Blackberry Messenger before it, Apple now has the strength to create their own device-to-device messaging application. And that’s exactly what they’ve done. And considering what a colossal rip-off SMS is, I can’t help but love this move. It’s exactly what I’ve been waiting for.
Texting conversations follow users from the HeyWire Facebook App to their smartphone or tablet and vice versa. Read a message from anywhere and respond on any device.
Yesterday, Slide, Google's social gaming company, quietly released Disco, an iPhone app that allows group SMS messaging. The app, which was first revealed by TechCrunch, enters a crowded market -- it seems like half the new apps debuted at SXSW earlier this month involved group messaging.
Text messages are expensive. Most carriers charge customers 20 cents for every text they send. But the tiny messages use up only a fraction of a penny's worth of bandwidth. Why do networks charge so much for something that costs so little?
Some people think it's an antitrust issue, according to The American Spectator.
The Senate Judiciary Committee's antitrust subcommittee even held a hearing on text messaging fees. Are service providers abusing their market power? After all, competitive markets tend to put downward pressure on prices. But phone companies are charging more for texts than ever before. And they've been raising their rates almost in lockstep.
Five years ago, the going rate was 10 cents per text message. Then Sprint raised the price to 15 cents. Competitors could have used their lower prices to lure away Sprint's customers. They didn't. They raised their prices to match Sprint's. The move to 20 cents per text followed a similar pattern. Suspicious.
So maybe this is an antitrust issue. But it could be something else, too. Maybe phone companies are unbundling texting from their other services. That way the only people who pay for text messages are the people who use them. If phone companies don't have to provide texting service for people who don't want it, they can keep costs down and charge lower prices.
... But times are changing. It turns out that a young company called Beluga makes a free texting application for smartphones. Since Beluga bypasses the texting cartel, you can have unlimited texting without the $5 monthly fee. Think of it as Skype for the text messaging set.
Not a lot of people know about Beluga yet. But Facebook is in the process of buying the company, and is planning to integrate it into its service. Remember, Facebook has over half a billion users. The texting cartel is going down, even without the Department of Justice's involvement.
Another article about group messaging, this time by ReadWriteWeb.
The big questions have been why is group messaging apps are the hottest topic now and why not Facebook or Twitter? The answer, it seems, could be very simple. Group messaging apps do something that sites like Facebook and Twitter don't - they take away the magic and the guesswork and provide a blunt instrument for communicating with small groups of people using both data and text messaging.
Group messaging apps simply assume that you are engaging in a real-time and asynchronous communication.
Group messaging apps make it simple to communicate with the people you want to communicate with. There is no magic involved. There is no algorithm. You're not throwing a message into a bottle to see who finds it on the other end - you're sending out a message that will arrive as an interruptive SMS or push notification on the phone in all your friends' pockets, wherever they may be.
Of course, this realm of new apps has taken off quicker with techies and early adopter types, but get ready for the oncoming mainstream explosion.
The New York Times on Group Messaging apps, the latest trend for smartphones.
For all the clever things smartphones can do these days — like stream movies and play 3-D games — the latest mobile craze centers on revamping one of the earliest phone applications, the text message.
Apps from a wave of new start-ups allow multiple people to participate in the same conversation on a mobile phone, like a group chat room or conference call held by way of text message. The new applications, most of which are free, include GroupMe, FastSociety, Beluga, Kik, TextPlus, PingChat, HurricaneParty and Yobongo.
... The desire for the new group messaging services, their creators say, stems in part from the popularity of Facebook and Twitter. As those sites have evolved and grown, the start-ups say it has become harder to cut through the clutter to have a meaningful conversation.
Mobile operators are beginning to expose their core capabilities, such as SMS text messaging, to developers, encouraging them to innovate with these capabilities, and most importantly, paying the developer for every transaction they create across the application programming interface or API. The Guardian reports.
This allows a developer like Hamish Rickerby of Glimmer Design, who currently has 11 apps in the app store for both iPhone and iPad, to integrate these new API business models into his current apps.
Rickerby's latest app, TextDeck, is a Mac OS app that allows Mac users to simply and quickly send SMS messages from their Mac desktop.
... These new operator APIs are giving smaller developers access to markets they've never been able to reach before.
Twitea.me is a service which enables people who do not have a smartphone or a permanent mobile internet connection in their phone or laptop to be in contact with their social networks – such as Twitter and Facebook - through SMS messages.
HeyWire is a free, ad supported texting app for iPhone and Android that connects with Twitter, Facebook and GTalk. TheNextWeb gives it a review.
By far, the coolest part of this app is the fact that international users will never have to pay to text to a U.S. number again.
Here’s how: Download the app and HeyWire assigns each user with with a real phone US +1 number. Right away you can use that number, over an Internet connection, to text with anyone in the +1 area code, skirting international fees.
HeyWire is available in over 146 countries. So get your friends signed up for HeyWire, and you’ll never have to pay for a text to them again if you text them within the app. You can also text them from 30,000 feet in the air if you happen to be on a WiFi enabled plane.
SMS revenues are down as people communicate through chat boards and within other applications like Words with Friends. Mobile communication is also surging on Facebook, Twitter and smartphone email clients.
Nevan Mrgan, an app developer for Apple’s mobile operating system, saw a noticeable decline in the number of standard text messages he was sending almost immediately after Apple rolled out 
The latest idea from the co-founder of Hotmail is a mobile application that will allow users to send text messages to any mobile in the world for free. 
The upcoming launch of a group-messaging service by China Telecom next week means that all three Chinese mobile telcos now have free SMS/IM-like apps. [via 
At a time when e-mail and many other forms of electronic communication are essentially free, wireless carriers are still charging as much as 20 cents to send a text message to a phone, and another 20 cents to receive it. 
Text messages used to be everything to the Generation Y. Though millions are sent each day, is the humble text message’s shelf life about to expire? 
AIM's downfall owes largely to the ubiquity of Facebook chat. And now, the company's going after the mobile crown—texting. 
Yesterday, 
Text messages are expensive. Most carriers charge customers 20 cents for every text they send. But the tiny messages use up only a fraction of a penny's worth of bandwidth. Why do networks charge so much for something that costs so little?
