SMS Moves Beyond Child's Play

Once a technology dominated by teenagers, the use of short messaging service (SMS) or “texting” is rapidly taking hold among adults 35 and over, according to a study by A.T. Kearney.

The Mobinet study of 2,400 mobile phone users in the United States, United Kingdom, France, Germany, Finland and Japan found that SMS usage grew by 10 percent since the Mobinet study conducted in January 2001. SMS is now growing most strongly among economically powerful middle-aged mobile phone users. In the 35- to 54-year-old age category SMS use grew by 20 percent, while in both the 55 to 64 and 65 and older categories, it grew by 14 percent.

SMS allows users to send a single short message that can be up to 160 characters in length via a mobile phone. It is a store and forward service, meaning short messages are not sent directly from sender to recipient, but through an SMS center or network. Unlike pagers, users do not simply send a short message and hope it gets delivered. Rather, the sender of the short message can receive a return message back notifying them if the short message has been delivered.

In the United States, SMS is beginning to make inroads as its usage rose from 8 percent to 12 percent among Internet-enabled phone users. Intent-to-use SMS in the future looks even brighter, with an additional 30 percent of Internet-enabled phone owners in the United States saying they are likely to use this method of communication.

“Having initially appealed as a cheap and handy communication tool for younger generations, SMS is now being rapidly adopted by adults,” said Paul Collins, A.T. Kearney principal and leader of the study. “If you regard SMS as more than just a messaging route but as a commercial opportunity, then this trend presents significant opportunities for mobile providers, retailers and marketers.”

Because of this, a number of commercial initiatives have been launched or are in the planning stages by mobile phone operators and independent service providers in Europe. In Italy, for example, the largest mobile phone operator, TIM, has more than 1 million registered users for its SMS services, which include news, finance and weather. The service is either subscription-based or free if users agree to accept a short advertising message prior to their requested information.

In Britain, insurer Direct Line sends an SMS message to a policyholder when their policy is about to expire. Because the message contains an embedded phone number, the receiver can press “call” and be put through immediately to a Direct Line call center.

Other U.K. marketers are also investigating the advantages of SMS. Cadbury, McDonald’s, Tango, Channel 4, Emap, British Airways, Guinness and Red Bull have all explored ways of reaching out to and interacting with customers via SMS. The number of planned SMS campaigns has prompted the U.K. Wireless Marketing Association to draw up a code of practice with network operators to try to avoid inundating and alienating mobile users.

“These new findings from our ongoing Mobinet research indicate that SMS could be the key to the pocketbooks of mobile users in the United States,” said Mitch Mitchell, A.T. Kearney vice president and co-leader of its North American communications and high technology practice. “As email eased the way for many computer users onto the Internet, using SMS in creative ways that benefit the consumer could get people more comfortable with using their mobile phones for non-voice purposes.”

What’s interesting about the SMS trend is that the Mobinet studies have found diminishing consumer interest in mobile purchasing using Internet-enabled mobile phones. Intent to use phones for purchasing has collapsed from a survey average of 12 percent six months ago, to just 4 percent. The first Mobinet study in June 2000 recorded a 32 percent intent-to-use.

“It is still too early to draw a conclusive view because some industry optimists believe it is simply part of a U-shaped curve which begins with the curiosity of early-adopters then falls away before climbing strongly as the sales channel becomes widely accepted,” Collins said. “However, at this stage there is no sign of a recovery.”

Actual mobile purchasing remains insignificant, recording a 2 percent response, up from 1 percent in the previous study. Germany showed the strongest increase in this regard, with 7 percent of respondents claiming to have purchased something online during the six months prior to the study, using an Internet-enabled phone.

In Japan, the NTT DoCoMo system has been well developed for m-commerce users in terms of handsets and adapted Web sites. Nevertheless, Japanese intent-to-use has fallen from 42 percent in June 2000 to 17 percent in January 2001 to just 7 percent today.

The study also found that penetration of Internet-enabled mobile phones worldwide has increased from 16 percent to 24 percent, primarily due to large increases in Japan (55 percent) and Germany (36 percent). In the United States, penetration rose slightly from 13 percent in January 2001 to 14 percent in June. It should come as no surprise that SMS is 35 percent more popular with users of Internet-enabled phones than with non-users.

Users of Internet-enabled phones are also extremely enthusiastic about their email possibilities. The number of mobile phone emailers has swelled from 37 percent to 51 percent. U.S. mobile phone-based emailers have grown from 27 percent of those U.S. users surveyed in January 2001 to 37 percent in June 2001.

According to a study by Accenture, the global market for wireless Internet-capable devices is set to grow 630 percent by 2005, by which time there will be more than 1.7 billion mobile connections. In the United States alone, Accenture predicts m-commerce transactions will be a $20 billion business at that time.