Decline of SMS but continued rise of Messaging

Brief: As this is such a long post, I'm going to give the brief conclusion I come to: SMS will continue to decline and will be replaced (in many way it has already happened) by the use of data-based applications and solutions.

 

 

Somewhere around 2010 (I estimate) I remember having a conversation with my younger sister, then a young adult. It was in relation to the number of text messages she sent per month and that her phone at the time (long lost to history) gave her a monthly tally of the number of incoming and outgoing texts. After chatting to her to double check, she vaguely remembers it being around 60-90 SMS per day - about 2,700 per month. For some reason I have a number in my head that it was closer to around 4,000 per month when we talked about it before but as I may be wrong, we can still use her recent (April 2015) estimation. I.e. 2,700 per month which is still a lot of messages! There are numerous articles online of average message numbers per month if you’re interested in looking.

 

Preface

I'm away on a climbing trip (post 1 and post 2) which seemed like a good opportunity to stretch some writing muscles after seeing a post over on The Irish Telecoms Blog called SMS is here to stay. It's based off a recent upswing as demoed from Comreg's most recent report covering up to Q4 2014 (visual representation of the numbers below).

I’ve commented directly on the post in relation the sections discussed giving reasons why SMS is here to stay, but I wanted to link to some other articles/posts and expand on my thoughts and thought process.... I don't have any vested interest in the topic other than it's one of the major areas of mobile that I suspect will continue going forward. I'm of the opinion that SMS will continue to show a steady, slow decline, but messaging will continue to increase.

 

As always, all thoughts are my own and not my employer.

 

Comreg’s Numbers

Firstly, I've graphed the numbers from Comreg above from the recent publication, showing numbers going back to 2005 for Voice Traffic, SMS Traffic and MMS traffic (there is significantly more information in Comreg’s quarterly report but for clarity purposes, this is easiest). 

Voice:Voice traffic is up around 50% in that period from 2005 to the end of 2014. Interesting to note that voice traffic as measured as 'mobile voice traffic' is now almost back at the peak level that was achieved at the peak of the Celtic Tiger.

SMS: SMS is now less than half what it was (after peaking at three times it's 2005 number sometime around early 2012), however it showed a slight increase in the recent quarter.

MMS: MMS is so small as to be irrelevant and not worth giving any time to due to it’s insignificant numbers.

Note I also haven’t included the other major traffic these days, data, but it will be referenced to throughout. Note also that the ‘Mobile Voice Traffic’ metric also exclude calls made using services such as FaceTime, Skype, Viber, Messenger, etc. These Over-The-Top (OTT) services also have a part to play in the SMS story as well which I'll get to.....

 

 

History: When it was all about SMS

Somewhere around 2010 (I estimate) I remember having a conversation with my younger sister, then a young adult. It was in relation to the number of text messages she sent per month and that her phone at the time (long lost to history) gave her a monthly tally of the number of incoming and outgoing texts. After chatting to her to double check, she vaguely remembers it being around 60-90 SMS per day - about 2,700 per month. For some reason I have a number in my head that it was closer to around 4,000 per month when we talked about it before but as I may be wrong, we can still use her recent (April 2015) estimation. I.e. 2,700 per month which is still a lot of messages! There are numerous articles online of average message numbers per month if you’re interested in looking.

As discussed above, SMS was still on the up-swing at this point in 2010, and would peak worldwide sometime around 2012 (see graph below), but what was starting to come into the mainstream more and more was the new type of devices that were introduced by the company who, on their first attempt at making their own phone, would completely revolutionise the mobile phone market. Of course, we're talking about the iPhone and all the phones that came later. It also specifically brought along with it the concept to the App Store into the public mainstream (previous mobile phone operating systems) and thus caused the first dent to occur in SMS once the iPhone had reached a significant proportion of the mobile phone market. By 2011 we were starting to see numerous examples of messaging services which would start SMS’s worldwide slow decline.

Source: The Economist

These tables are now also slightly out of date as we now know that Whatsapp currently has over 800 million monthly active users as of April 2015 so we can assume that there are some changes across all the apps displayed above. Another interesting aside: the top 2, Whatsapp and Facebook Messenger, in the above image are owned by Facebook.

 

 

Rise of the Smartphone

Credit: Charles Arthur. Note that this diagram is worldwide percentages but it should be comparable/similar for Ireland.

Credit: Charles Arthur. Note that this diagram is worldwide percentages but it should be comparable/similar for Ireland.

"Y'all talk about UX like it's just another feature. For a user, it literally is the product. Full stop. Everything else is inside baseball."

Startup L. Jackson, Twitter

Firstly, it's worth looking at the current state of smartphone penetration. It currently sits at 59% for Irish users according to Comreg. It's important to remind ourselves of the origins of the modern smartphone era and that the iPhone was only released in 2007 (which interestingly, nicely coincides with the earliest data Comreg currently publishes). Prior to 2007 there were so-called smartphones but we can now look back at them and recognise them for their challenges - terrible User Interfaces (UI's), small screens, etc. (I've written about this before so won't go into again - I recommend going through older posts of mine if interested). With Apple releasing the iPhone, and Google following up with Android, it's also important to remember that the 'phone' aspect of the devices were still largely the same with the only real difference being that the phone was now just a button on screen and not the primary focus of the device as the device now was promoted as three components that had been merged. Yes, previous handsets had attempted this before but none made all the sections so intuitive to use.

“The first one is a widescreen iPod with touch controls. The second is a revolutionary mobile phone. And the third is a breakthrough Internet communications device”. 
— Steve Jobs, first iPhone keynote

Back then in 2007 phone calls and text messaging were the two most important uses for a phone and they were largely replicated in functionality on the 1st generation iPhone due to Apple's initial wish to control all aspects of the experience on the phone. But all changed with Apple's pivot a year later. This pivot being that the original iPhone did not have any 3rd party apps and Steve Jobs, Apple's CEO, was completely against the idea - famously he refused to allow carriers to modify the UI in any manner as had traditionally being the case before that (and especially after Apple's first foray in mobile phones where they allowed Motorola to customise a handset so they could put iTunes on it - it turned out to a complete failure due to Motorola's inability to build a good user interface, as well as taking 18 months to re-engineer a handset to Apple's needs). Once Apple opened their App Store in early 2008, Google promptly followed suit after they had released Android and thus begun a tidal wave of new ideas and paradigms and businesses that would have never succeeded if not for being accessible in the palm of your hand, flourishedc(notable examples being Hailo, Uber, Babylon, etc. etc. - the subject for a whole other article). Most importantly, by opening the App Store, Apple provided the option for new types of messaging services to be offered (much to the disappointment of the carriers who until then had largely restricted such concepts on previous types of applications offered on earlier handsets, most of which ran on Symbian).

 

OTT SERVICES

It is probably worth looking at SMS, the technology also to guide where it is fits into the wider eco-system.

Firstly, consider the two forms of communications: 1:1 and 1: Many. SMS is an example of 1:1 communication, and radio and television are examples of 1: Many. Taking this analogy we can also then break it out into two other sub-sections of communication: ‘synchronous / real-time’ or ‘asynchronous’. Examples of Synchronous are voice calls, or even television and radio, requiring interaction as they happen. Examples of Asynchronous are SMS, Whatsapp, Viber, Snapchat, etc. or even on-demand television or radio (usually distributed using podcasts). These are shown visually below:

SMS is also limited to purely one solution, 1:1 communication and fails completely when it comes to 1: Many - not everyone sees each response (as only the originating sender will show up to the receiver of the original message) and thus it’s a flawed system for group messaging. However, newer solutions such as the iMessage, Whatsapps, Vibers, etc. all support full 1:many communication as well as additional capabilities such as media, or any form of attachment. SMS attempted this with the addition of MMS but is completely underwhelming with the reductions in quality caused to media sent through the technology.

 

One of the aspects to consider however is how many messages you actually do send anyway using the 'traditional' SMS method. If you're on an iPhone right now, have a quick look through your most frequent people you send messages to. If it's in blue (and not in green), it means it went via Apple's iMessage service (i.e. a data-based service). We also now know via Millenial Media's stats that Apple's iPhone has 54% penetration in Ireland so the odds are high that a significant portion of the messaging is iPhone-to-iPhone (and is likely to increase as the economy improves, as well as the other 41% of non-smartphone users looking to move over to their first smartphone.....).

The use of smartphones opened the door to the use of apps (and also demonstrated the power/control Apple pulled back to the handset makers from the Telecom Operators when it introduced the iPhone). We have also had a rise in a multitude of different messaging services. This image alone gives a small glimpse into the range of possible services but also excludes a multitude of others that are in use: LinkedIn, iMessage, WeChat, Line, Yo, Wire, Kik, Kakao Talk, etc. etc. While some of those listed are not mainstream in Ireland, they are absolute monsters in other parts of the world - taking just the example alone of WeChat which is estimated to have over 500 million active users.

A typical example of a phone in 2015 - numerous different messaging services to content with. Note this also doesn’t include the traditional SMS/iMessage app.

A typical example of a phone in 2015 - numerous different messaging services to content with. Note this also doesn’t include the traditional SMS/iMessage app.

 

Benefits and Weaknesses in SMS

Taking some of the reasons that are given when promoting SMS going forward from the Irish Telecoms Blog post, I’d like to highlight a few aspects and give my own thoughts:

Benefit (but less so?) - COVERAGE

Due to my hobby of climbing and a general wish to spend time outdoors, I spend a lot of time in hilly regions of Ireland which traditionally were notorious for terrible phone signal. I'm personally finding that it's now one or the other of:

  1. No signal at all
  2. I have a signal and I also have a data connection of some sort (even if not a high-speed one).

Based on this current coverage, having a data connection can be almost assumed going forward - I’d also be willing to bet that in the next few years, Ireland will mirror the USA (and I’m sure other countries) by seeking to shut down the 2G network so that this capacity can be re-allocated to new technologies and thus also helping to improve data coverage nationwide.

 

Strength (not anymore?) - Interoperability and Coverage

Whilst up to now Mobile Operators, and the association that provides all the specs for the technologies, have largely worked on a Microsoft-ian approach by always offering backwards compatibility, it is evident that they have also to follow an Apple-ian approach by discarding the old (Apple's latest Mac being the extreme of this discarding every port except for a single USB port) to move forward. In this case, by not evolving SMS at a quick enough pace to support additional It may be counter-intuitive to protect older customers or parts of the business but again taking Apple, one of the secrets to their success has being their willingness to allow new products destroy their existing markets for other products they produce - the iPhone destroying the iPod market, or even in recent months the newer larger-screen iPhones eating into the market for the iPad. Microsoft is also following a similar approach and challenge with its latest Windows 8 and upcoming Windows 10 (which will be free to get, and will also include a new browser that kills a lot of old technology that was in earlier versions of Windows).

Another point to note is that frequently I'm in buildings that have terrible (or any) mobile signal but which allow me attach to the building owner's wifi. In such a case every messaging service with the exception of SMS will then work.

 

Weakness - Group Messaging

As mentioned previously, SMS is dreadful when it comes to group messaging. Send a message to multiple people and they come back as separate conversations so only the original sender sees the wider conversation. iMessage supports this as standard, and almost all the above apps are one-to-many capable (in different forms, some being private chat, others being public).

 

Strength (but less important) - THE PHONE NUMBER

I've used the above photo before showing a small list of messaging apps that exist on my own phone - there's also the extreme example as below - a glimpse into the range of messaging services that exist.

Some important points I've realised from using these apps, and in particular group conversations:

  • Going back to the previous topic and group messaging, by being part of group conversations the network has supplied the numbers for everyone I need. In one group of like-minded rock-climbers, there's at least 30 people in the group - I would have only had around 10 of the numbers but the odds of at least one other person having someone else's number has meant that people get added organically.
  • Every new messaging app already has access to your address book when installed to your phone anyway so building the initial list of contacts is less of a problem. In the case of some apps, they also have access to your friends list from Facebook or Twitter. The flip-side to this is that you may have the contact's number but they may not have the app installed - again, something that is becoming less of an issue as many have a means to contact you through alternative messaging service with a link to download the app.
  • Another interesting aside: sign up for Asian-based mega-apps like Line or WeChat and you don't need a number to communicate between devices (you're registered by scanning a bar code on a computer screen from your phone which links the two together). 

 

2-FACTOR AUTHENTICATION BY SMS

What is 2-factor Authentication?

2-factor is a means of extra security on a website where if you log into a website using a username and password, an additional layer of security can be added for additional verification i.e. a 2nd level of authentication.

An item mentioned in the Telecoms blog post. This is a minor one I'm not willing to support and for exactly the reason that highlights one of SMS's potential benefits at times.

As mentioned above, I am regularly in situations where I've been in a house/building with very no mobile coverage but I've been on the wifi. In these situations, when I go to sign into an account that requires an authorisation text message alongside my normal username/password, I'm then left in the situation where I'm unable to log in. This is specifically a situation when abroad. For this reason alone, I'm a believer that 2-factor authentication should be primarily app-based, and ideally using the open-to-all Google Authenticator.

More importantly, one other important point to note is that I don't really believe the 2-factor authentication will take off in the consumer space. It's not fully understood and, most importantly, it's one extra step (and when the most popular password in the world is still '123456789' or 'password') where the consumer has never shown any enthusiasm for security). Enhancing security is critical but unless it is frictionless ‘normal’ consumers will not be interested. I believe that more and more technologies such as the Apple Touch ID or Samsung's equivalent.

 

My thoughts on the future (of messaging)

It’s worth keeping in mind this tweet when considering where messaging is going next:

It's a very different era when a team of 30 engineers (the total employee base of Whatsapp for all versions of their service - 5 on Android, similar number for iOS and the rest on Operations) can deploy a service with almost a billion active users.

MESSENGERS are arguably the most successful smartphone apps. The ten biggest collectively boast more than 3 billion accounts.
— The Economist

Relating the various aspects of types of messaging as detailed above also (1:1, 1:many, etc), more and more types of messaging services will continue to develop. Services to communicate directly both person-to-person and business-to-person (and not to mention, person-to-business) will evolve and become more disparate for a time. I do envision some consolidation here after the initial land grab, in the same way that in the early days of most technologies numerous different ideas and solutions are thrown against the wall to see what sticks. However, we’re also just exploring the possibilities of communication on this newer medium of smartphones - evident by the very fact that messaging is still increasing as a whole (even with SMS numbers down, if you add all the other messaging services together you get a number that absolutely blows SMS at its peak away).

However, and going back to to the original idea for this post, I believe the basic and pioneering SMS will disappear to be replaced by a more comprehensive idea. The previous paragraphy describes new use cases for messaging and how individuals may communicate out to businesses and interests. However, the primary wish for most people is to use communication tools between family and friends - they don't care about the technology, only that it provides the best possible experience and tools in an easy to understand package.

Looking at it from the operators perspective, the functionality has already been developed and released (e.g. Joyn, Vodafone Message+, etc. ) but the challenges of controlling the full system (i.e. all voice and SMS provided only by the carrier) as in the peak period of SMS are unlikely - especially as the mobile operators have lost the ability to control what is pre-installed on a large aspect of the user-base i.e. the iPhone, which means they are fighting for visibility against all the other apps out there. When it comes to users, they all follow the Network effect of where their friends are.  I fundamentally believe that people will continue to use multiple other services going forward and that these services will be monetized by selling apps and services through the actual messaging client

 

The following twitter post gives an idea of how new solutions to develop messaging in other ways are required:

This also demonstrates another avenue for messaging in that eventually, as we all begin to download apps to connect directly to various businesses and services, that we may just communicate directly with businesses directly from within their own app thus keeping the conversation linked directly to them. Again, benefits can be seen in that your full history will be stored for quick access and review.

It will also be interesting to see whether a similar experience occurs with voice calls as Whatsapp and the numerous dedicated messaging services that will add voice calling functionality.

 

We all Move On Eventually

 

Coming back to my sister and her 100-odd messages per day (as mentioned at the beginning of this post. I asked her the same question recently in a chat conversation:

Me: "hey, do you remember how many text messages you used to send and receive per month when that was all you used?"

Sister: "I think it was about 90 a day. But what you mean the year I sent loads? I still do..."

Sister: "Now, it's mostly through Viber"

It also shows in a recent chat we had about my job and perks of work. Her only concern (which was also sent by Whatsapp):

 

"Can you get me more data?

Search, messaging & location are primary building blocks on mobile.
— Ben Evans, Telecoms Analyst - a16z.com
Neal McQuaid