The Death of SMS...or Not

This morning I was surprised to see that my cellphone bill had shrunk by half. On closer inspection, I discovered I had only sent two SMSes from my phone, down from over 200 a month ago. Internet-enabled apps like WhatsApp and Skype had replaced SMS on my phone, leading to not only a substantial reduction in my phone bill, but also changing my messaging habits.

In the last 20 years, SMS technology has had a profound impact on the way we communicate. According to the International Telecommunication Union, around 6.1 trillion messages (Acharya, 2010) were sent around the world last year. Technically, an increasing use of SMS should translate into greater revenues for the telecom companies (telcos), who charge between 10 cents to 60 cents per message. However, in the last few years, telecom companies in the U.S. (Raman, 2011) (see graph) and Europe have seen a slow-down of their SMS revenues. In the Netherlands, KPN Telecom has seen up to a 10 percent decline in SMS revenues in 2010 vs. 2009 (Hoogsteder, 2011).

Let’s try and understand the reasons behind the trend:

1. Increasing smartphone penetration. With close to 165 million BlackBerry (BlackBerry DevCon, San Francisco, Oct. 2011) and 200 million iPhones sold, these Internet-enabled phones have introduced a plethora of real-time communication options like WhatsApp, eBuddy, and Skype through the various app stores. In fact, WhatsApp has positioned its service as an SMS replacement. Its popularity can be gauged by the fact that over 1 billion messages (Geller, 2011) are sent on WhatsApp every day across iOS, Android, Windows Phone, BlackBerry, and Symbian devices!

2. Broken communication. In my opinion, SMS is a message delivery tool rather than a communication tool. Although SMS works anywhere in the world, it does not allow you to have a real-time conversation since it is impossible for you to know whether your message has reached the destination. With WhatsApp, you can see whether the person is online, thus enabling you to have a conversation and see your messages being transmitted and received.

3. Too-much spam. Although privacy laws in most countries prevent SMS spam, in countries like India users still receive 10 to 15 advertising messages every day. The spam issue goes away with WhatsApp and Skype, which are open only to your friend group. So no more interruption in the afternoon naps. Hooray!

4. Anti-social. There was a time when SMS was cool and we used to have competitions on who could type fastest. Those were also the days when Nokia was No. 1 in phones and Apple was for geeks. In a social media-driven world, group chat and sharing pictures/videos easily are essential features of a communication tool. SMS is mainly effective for one-to-one communication. To send pictures one can use MMS, which is both expensive and cumbersome and definitely not cool!

5. The Apple factor. As Apple rolls out the iOS5 with the iMessage functionality, the use of SMS on Apple devices will be further diminished since the iMessage app will automatically route messages via the Apple network. This is especially important since the iMessage now enables iPod touch and iPad users to message each other on Wi-Fi, thus indirectly reducing their SMS needs.

A few elegant technologies are shaping the future of messaging. I don’t think that SMS will ever disappear unless everyone has a smartphone and decides to use WhatsApp. However, its role and functionality will change to fit the consumer needs and the social world.