For the past few years, SMS traffic in the United States has been growing at a rate of over 125% annually. Sixty-six percent of mobile phone owners use SMS. Nearly 80 percent of these SMS users are on monthly text plans, with half on unlimited plans. We will see high SMS growth again in 2009, albeit at a lower rate. With the United States having higher unemployment and lower retail spending, and being officially in a recession, you may wonder if I have been drinking too much left-over New Year’s Eve champagne. However, below are a few justifications for this prediction of continued growth in SMS:
- With the vast majority of phones being SMS-enabled and a large percentage of frequent SMS users subscribing to unlimited plans, the incremental cost of sending another SMS is negligible for many users.
- SMS is increasingly being seen as a “must-have” rather than a “nice-to-have.” In 2008, the number of messages sent surpassed the number of voice calls made. In 2009, consumers may turn off their landlines and replace their mobile phones less frequently, but they are unlikely to significantly alter their SMS usage patterns.
- Enterprises increasingly understand the cost reduction benefits of using SMS. In the current economic climate, SMS may become a more widely used customer service tool.
- The growth rate of SMS will slow in 2009, but mainly due to normal adoption patterns. With 66% adoption, there is room to grow, particularly in the older age groups. But clearly, adoption growth will slow as we approach the saturation point.
So what about other mobile applications, you ask? Will 2009 be the year of mobile advertising, location-based services (LBS) or mobile commerce? Unfortunately, not enough left-over champagne can convince me that these applications will see mass adoption in 2009. The current tough economic conditions and its impact are not helping emerging mobile applications. Another factor is the lack of ecosystem development. The various players – carriers, advertisers, device manufacturers, etc. – all remain fragmented. Below are a few insights into these various mobile applications:
Mobile Advertising Every year since 2006 has been proclaimed the year of mobile advertising – but the prediction always falls short. Once again, 2009 will NOT be the year of mobile advertising. It is a shame, really. Mobile coupons could be very useful in these tough economic times. However, the lack of cooperation among carriers, advertisers and others in the ecosystem on how to efficiently and securely share sensitive customer data and equitably share in the ad revenues remains a significant obstacle. In addition, because the mobile channel is still viewed as “experimental” by many advertisers, it will likely be one of the first to face budget cuts.
LBS 2008 was the year of what I like to call “LBS 1.0” All of the major U.S. carriers launched a few LBS applications, mainly around navigation and social networking. In 2009, we will continue to see adoption of these applications, although at a slower rate for premium applications. However, even if LBS adoption doubles in 2009, it will still be less than 15 percent of the U.S. population. So what is preventing LBS from seeing mass adoption in 2009? Once again, it is the lack of ecosystem cooperation and standards development, unclear business models and privacy concerns.
Mobile Content As much as I would like to say that 2009 will be the year that mobile content rebounds, I cannot honestly say this will happen. However, I do believe that 2009 may be the year that the industry cleans itself up and sets the stage for innovation and revival in 2010. Industry leaders such as CTIA and the Mobile Marketing Association (MMA) are already well on their way to setting enforceable standards and ridding the industry of “wild west” behavior. Consolidation in the ecosystem and innovation should result.
Mobile Commerce NOT. Seriously, let’s not even go there.
But not all is gloom and doom. Smart industry players will use 2009 to build the required standards, ecosystem and business and implementation models. Smart investment in 2009 may just enable 2010 to be THE year of mobile advertising, LBS, content’s comeback and global peace.
Regardless of what happens in 2009, the continued popularity of SMS is undeniable. As my kids’ babysitter said recently, “Without SMS, I would not have a social life. I may not buy that pink Coach purse I have been eyeing. But not having SMS is just uncool.”
You can’t argue with cool.
Shah is the director of Corporate Development and Strategy for VeriSign’s Wireless Messaging and Mobile Media Group.