Saturday, June 25, 2011

1.3 bn users to adopt Mobile Instant Messaging by 2016; poses no threat to SMS

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Juniper Research, the England based leading analyst firms in the wireless sector, in its new report has predicted that over 1.3 billion mobile phone users will switch to the advance ‘Instant Messaging’ facility by the year 2016.

The research says, the foray of new services such as Apple’s iMessage, AOL’S AIM, Blackberry Messenger, Skype, Yahoo! Messenger, Nokia’s Pushmail and Microsoft’s Windows Live will drive subscribers’ interest towards this new version of messaging, which was earlier restricted to one-on-one and one-to-many messaging through SMSes.

Within the SMS market, revenue from Application-to-Person (A2P) SMS will exceed $70bn by 2016, overtaking Person-to-Person (P2P) during that year. A2P messaging - defined as those messages which are sent to or from an application - has a wide variety of use-cases, including financial services, ticketing, and any other service involving sending or receiving a large number of messages.

In addition, despite SMS charges coming down significantly over years, the charges for an outgoing national SMS remains at about INR 1.0 per local message on prepaid and INR 0.50 on postpaid. There are SMS packs for heavy users of SMS, however, the adoption of these packs remains relatively limited. Given that a majority of the student and youth population is on prepaid plans, the availability of a free (or in other words, included in majority of data plans) messaging alternative, especially for casual, instant communication makes a lot of sense for this section of users. Other feature-phone providers are also embedding IM aggregation clients in their devices which work on the data channel to allow free chat, but have not become as visible as BBM. The affordability benefit is much clearer for international messaging on-the-go, providing an alternative to paying INR 5.0 per SMS for international texting, and is a significant use case for urban Indians with an international network of friends and relatives.

But, at the same time no threat to the existing SMS service has been observed with the popularity of Instant Messaging. The main reasons behind this are certain limitations in terms of usage of IM. One of the most prominent one is the restriction of having smartphones or high end handsets, the sales of which are undoubtedly increasing at a fast pace but still there is a large number of mobile users who own a basic mobile device. Secondly, the IM service restricts the communication to a specific brand (Only two persons having Blackberry devices can use Blackberry messenger), whereas, SMS has no such obligation and they can be sent to any of the network provider or handset brand.

The launch of these free Mobile IM services has been facilitated by the increasing number of smartphones in use, low-cost data packages and the development of high speed mobile networks. While some IM services are ad-funded, most are viewed by the operators as customer retention tools, with the only cost to the user being the data usage charged.

Adding to the popularity of Instant Messaging, these services offer the real-time communication and apparent absence of cost. But, the market is fragmented by different services which cannot communicate with each other. The Instant Messaging clearly demonstrates its endeavor in an internet-centric mobile ecosystem. IM is helping significantly enhance the value proposition of the mobile gadget and potentially helps developing a social network which can be monetized in the future through services and software revenue.

Article by Gaurav Maurya

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