Digital disruption hitting SMS revenues up to $54bn by 2016 as consumers go social

 In digital disruption

Interesting report just out from Ovum which predicts that global telecom operators are expected to have lost $US23 billion ($22.58b) in SMS revenues by the end of 2012 as smartphone users shift to free messaging applications.

They go on to forecast that the cumulative losses would reach $US54 billion by the end of 2016 as the traditional Short Messaging Service (SMS) gives way to internet-based platforms such as WhatsApp.

“Social messaging is becoming more pervasive and operators are coming under increased pressure to drive revenues from the messaging component of their communications business,” said Neha Dharia, consumer telecoms analyst at Ovum.

What does this mean?

Having worked at two telcos (Optus and Telstra in the 90’s) I know what it used to be like – a licence to print money.

SMS revenues have been especially handsome for operators for a long time.  The real cost of sending an SMS is actually a fraction of a penny/cent so the margins on SMS are huge.

Now that consumers have discovered that they can not only have a better experience via these next generation apps, and that messaging this way doesn’t eat into their SMS allowances, and they can also have group conversations, they are moving to data driven messaging.

Just another example of how digital disruption is now starting to bite everywhere.  Operators have long feared they will just become a “dumb pipe” as the over the top players provide the rich experience consumers are demanding.

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Based in London, Practical Futurist and former Global Managing Partner at IBM, Andrew Grill is a popular and sought-after presenter and commentator on issues around digital disruption, workplace of the future and new technologies such as blockchain. Andrew is a multiple TEDx and International Keynote Speaker.