Growing smartphone apps ring the alarm bell for SMS

Rashmi Pratap Mumbai | Updated on September 23, 2013


Text messaging down to 2/day from 9 in July as instant chat services grow

Smartphones are ringing the death knell for short message service (SMS). And voice calls on mobiles could be next in line.

With elaborate chats and social messaging becoming easy on smartphones, the usage of SMS for communication has gone down to just two per day in July 2013 compared with nine per day two years ago, points out a study.

Even the number of calls being made from smartphones has remained constant at five per day between July 2011 and July 2013, according to Informate Mobile Intelligence, which tracks mobile usage patterns across India.

Simple text messages have given way to messenger services such as WhatsApp and voice over Internet (VoIP). “These services are constantly evolving. And added utilities such as sharing pictures, music or even recorded messages makes them more interesting than instant messaging,” says Kedar Sohani, President of Informate.

Falling revenues

Not surprisingly, the contribution of SMS and value-added services to the revenues of operators is going down. For Bharti Airtel, the share reduced to 8.2 per cent in June quarter from 11 per cent a year ago.

The study shows that 81 per cent of smartphone users are now using chat as against 58 per cent two years ago. And an average smartphone user is chatting for 27 minutes every day against seven minutes in July 2011. “Non-chat users currently comprise only a fifth of smartphone users. But if the trends are anything to go by, finding non-chat users in the future is going to be difficult,” he adds.

Idea Cellular Managing Director Himanshu Kapania explains that SMS is the first to get affected in such a scenario as moving to data is a natural progression for an SMS user. “

However, a voice consumer adopting data is not a natural progression. VoIP is not yet a settled technology, with experience not being uniform,” he adds. Moreover, voice rates in India are among the lowest in the world, leaving almost no scope for benefiting from VoIP.

Kamlesh Bhatia, Research Director at Gartner India, terms the emergence of social messaging as “the ‘substitution effect’. SMS is being substituted by social media and instant messaging. Operators are feeling the pinch because SMS was the biggest component of their revenues from value-added services (VAS). And its contribution is now going down”.

The increasing trend towards data usage is showing in the growing revenues from mobile Internet for operators. Airtel’s mobile Internet revenues grew around 90 per cent year-on-year in the June quarter.

Dwindling popularity

Ditto for Idea Cellular that reported 92.2 per cent mobile data traffic volume growth in the June quarter over the year-ago period.

The company’s average 3G data revenue per user has also increased by Rs 20 in the last one year to Rs 109 in the June quarter. The reasons behind the dwindling popularity of text messaging are not difficult to fathom. While the rates for SMS vary from Re 1 for local messages to Rs 1.50 for national and Rs 5 for international, data services usage can be unlimited after paying a fixed fee. Moreover, most social messaging services are either free or based on discounted plans.

For now, data seem to be beginning to cannibalise SMS revenues for operators in India, as is the trend globally. In markets such as Europe and South Korea, SMS revenues will almost become negligible in the next few quarters, says Gartner’s Bhatia.

Before that happens in India, operators have to think of alternative means to beef up revenues. Else, increasing data prices may be the only way out for them.


Published on September 23, 2013

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