SMS is Not Dead – Yet

By August 25, 2015blog

By Yehuda Simon, Guest Contributor

In a 2012 interview with the BBC, Matti Makkonen, the ‘Reluctant Father’ of SMS, asked on his vision of the future of SMS responded as follows:1

“Will SMS survive another 20 years – or will Facebook, Skype and other instant messaging chat systems take over? 20 years is long time… I believe that reliable convenient to use text messaging will stay forever. Is not necessary what we call SMS. No more pay per message.”

Yet just 3 years down the line, this response seems overly optimistic. In 2013, Instant Messaging usage grew by 316%2, with 170 million new users in this period.3 This is mirrored by the rapid growth of smartphone ownership. 73% of people in the world have a mobile phone as of 2014, of which 40% own a smartphone. WhatAapp, the most popular IM platform, experienced a rapid increase of active-users, from 200 to 800 million in the past 2 years.4

Meeker-Global-Mobile-Usage-605x377

Source: Informa, World Cellular Information Service (WCIS)

Whilst the explosion in the IM sector goes hand in hand with the downfall of SMS, there are several reasons why SMS continues to survive.

One size fits all

SMS is available to anyone with a mobile and a service plan. This allows one to reach a large audience, rather than being limited to those with an internet plan (see further below) who have registered with a specific IM platform. The lower barrier to entry makes SMS ideal for reaching a large audience.

Strong engagement rate

SMS has the highest engagement rate in comparison to email and IM, as well as a 90% read rate within the first 3 minutes.5 This is an ideal platform for time-sensitive issues, as Uber will send an SMS to update a customer on his ride’s progress.

Mobile data costs

In the developing world, mobile data plans are simply to expensive for many users, and they therefore only use SMS rather than internet-dependent IMs. A poll by Nielsen6 on 10,000 Indians in 46 cities found that 50% turned off the internet functionality on their phones. This is a reflection of the high cost (relative to the hourly wage) of an internet plan. The table7 below shows how in some countries, it takes up to a week’s worth of work in order to cover a 500Mb data plan.

data-trap-hours-of-min-wage-01

Old Tech, New Take

Startups such as GoButler and Magic provide a 24/7 concierge service through customers asking for practically anything through SMS. This old-school method has breathed new life into a flailing technology.

2 Factor Authentication

As security becomes increasingly relevant, many companies now offer an (optional) extra layer of security involving a 2 step authentication process where the user must input a code sent by SMS.

two-factor-authentication-02

Source: Paul Reviews – https://paul.reviews/does-two-factor-authentication-actually-weaken-security/

Although SMS may appear like an antiquated technology, indeed its prevalence continues to fall, the reality is that it has found a home in niche markets, where it plays an important role connecting us with many of the important technologies we use in our everyday life.


Sources:

1. http://www.bbc.com/news/technology-20562371

2. http://www.statista.com/statistics/303890/annual-global-mobile-messaging-app-growth/

3. http://www.statista.com/statistics/369260/mobile-messenger-users/

4. http://www.statista.com/statistics/260819/number-of-monthly-active-whatsapp-users/

5. http://thenextweb.com/future-of-communications/2015/02/09/sms-vs-push-vs-email/

6. http://www.nielsen.com/us/en/insights/news/2013/smartphones-keep-users-in-india-plugged-in.html

7. http://blog.jana.com/2015/01/26/the-data-trap/

 

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