Alex Zaharov-Reutt
Tuesday, 18 December 2007 21:53
Opinion and Analysis
Page 1 of 2
Analyst firm Gartner has released its latest forecast of SMS text
messaging volumes and revenues, showing us all just how much money
there is in SMS, while advising operators to prepare for “much reduced
margins on messaging services”.
Gartner’s latest US $4,995 report, entitled
“Market Trends: Mobile Messaging, Worldwide, 2006-2011”, has just been released, showing just how popular SMS messaging has become, just how profitable text messaging is today, while predicting a commoditised market that will greatly reduce margins in the future.
Gartner’s
press release explains that 2008 will 2.3 trillion messages sent worldwide, generating US $60.2 billion, up from 1.9 trillion messages in 2007 at a revenue of $50.2 billion.
Competition and market saturation has worked to steadily drive the price of text messaging lower for consumers, ‘thinning’ operator margins and slowing the ‘compound annual growth rate’ or CAGR for SMS reveue from 29.8% in 2002-2006 to only 9.9% from 2007-2011.
Nick Ingelbrecht, research director for Gartner said that: “In many markets, there has been strong pressure on operator margins for text messaging services and this has been driven by often intense competition between carriers”.
Ingelbrecht continued that: “At the same time, consumers have grown accustomed to large
or unlimited bundles of inclusive SMS as part of their basic cellular service package. Carriers should plan for a future of much reduced margins on messaging services. They should develop messaging platforms, services portfolios and pricing plans that support the broader objectives of customer acquisition and retention, rather than short-term margin enhancements.”
Gartner says that the Asia Pacific and Japan are “the biggest consumers of mobile messaging”. As 2007 is not yet over, Gartner’s prediction for this year is 1.5 trillion messages sent in the region, a figure that is predicted to grow to 1.7 trillion in 2008.
This will be both text and picture messaging, although Gartner says picture messaging will actually decrease as users decide to share photos instead through Web 2.0 and social networking sites rather than sending them directly to each other.
Gartner’s press release doesn’t mention in, but sending picture messages often costs at least double the cost of sending a text message, if not more, so it’s hardly a surprise that users would want to share lots of photos via the essentially free medium of social networking and Web 2.0 sites, however the chances are very strong that Gartner has covered this in their report.
So, what are the messaging figures for Australia and the rest of the world? And what are the things Gartner says carriers can do to make up for falling messaging revenues in a world of IM, Skype and plenty more options? Please read onto the conclusion on page 2 to continue...
