A New Era for Messaging

This whitepaper is an extract from:

Mobile Messaging MarketsSMS, MMS, IM & Email Strategies 2011-2016

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Whitepaper ~ A New Era for Messaging

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A New Era for Messaging

Introduction

Despite being the oldest form of value-added services, SMS – the most prominent form of mobile

messaging – remains a key part of MNO (Mobile Network Operator) service revenues. Time and time

again the word that is used to define the success of SMS is: ubiquity. The penetration of mobile devices,

the number of these devices which support SMS, and the number of mobile subscribers that engage in it is

so great that – as a mobile data service - it is unrivalled. The age of SMS – which with most technologies is

perceived as a hindrance – is its strength: it has been around for so long that almost everyone can do it,

and almost everyone does.

Furthermore, the simplicity of SMS makes it so versatile that the potential usage of it is wide-ranging,

meaning that it has been adopted in a huge number of ways beyond simple P2P (Peer-to-Peer)

communication. A2P (Application-to-Person) and, its opposite P2A (Person-to-Application) SMS are

increasing as a proportion of SMS traffic, through uses such as financial services, advertising and social

networking.

Its sister technology MMS however, is something of an enigma. Adoption in some countries, such as the

US and China has been staggering, but elsewhere it has been slow due to a variety of reasons including

pricing and lack of integration into device UI (User Interface).

Mobile IM (Instant Messaging) has been boosted by the smartphone boom. However, while there are

those that might argue that it represents a threat to SMS as the primary means of text communication on

the mobile device, Juniper Research sees a number of reasons why it will remain a complementary activity.

Mobile email, which up until a few years ago remained the preserve of enterprise services, is another area

of mobile messaging to benefit from the smartphone revolution. These devices, with a large screen and

QWERTY keyboards have given users an experience approaching that which they are used to on

traditional email devices. However, Juniper Research believes that mobile email will also remain most

popular amongst business users and older demographics who have not transitioned to emerging

technologies.

Definition of Mobile Messaging

Mobile messaging is a wide ranging category within the mobile ecosystem and it is important to clarify

Juniper Research‟s definition for the purposes of this whitepaper: firstly, in terms of the technology being

used to deliver a message; and secondly, in terms of the nature of the sender and recipient of the

message.

A New Era for Messaging

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i. Delivery Mechanisms

Firstly, in terms of the delivery of messages, this report analyses the current state of, and forecasts the

potential size of the market split by four key services: SMS (Short Message Service); MMS (Multimedia

Messaging Service); Mobile IM (Instant Messaging); and, Mobile Email. These can be summarised as follows:

• SMS: referred to colloquially as a „text message‟, or simply, as a „text‟, an individual SMS is 160

characters in length – though several can be strung together to create longer messages.

• MMS: referred to colloquially as a “picture message”, though this tag is based on its predominant

usage – MMS also facilitates the sending of audio and video files, and this is becoming more

common as handset and network technology develop.

• Mobile Email: enables communication between most devices, whether on a mobile or fixed

network – 2.5G (GPRS) and 3G have given users constant connectivity access to their email and

increased its popularity.

• Mobile IM: IP-based (Internet Protocol) applications, which have been ported from PC IM

(Instant Messaging) equivalents, and enable almost instantaneous real-time communication

between two or more peers.

An important distinction between these four types is the role the operator plays in terms of delivery and

monetisation. The relatively mature services – SMS and MMS – are principally the preserve of the

operator as units of usage are bundled in the monthly subscription (in the case of postpaid, or contract

subscribers) or assigned a price (e.g. $0.10 per SMS, $0.25 per MMS) by the operator and deducted from

any credit (in the case of prepaid, or PAYG (Pay as You Go) subscribers).

ii. Sender/Recipient Relationships

In addition to defining the methods of message delivery, within SMS and MMS, it is also important to

define the sender/recipient relationship types we are analysing:

• P2P (Person-to-Person): a message where the sender and recipient controlling the device

transmitting the information are both human beings, sending images or video for personal or

business purposes.

• A2P (Application-to-Person): an automated message sent by a software application to a device

controlled by a human being, e.g. an SMS containing personal banking information, such as, an

account balance – given the infrastructure needed for this type of application, it will more likely be

acting on behalf of an organisation, while the recipient could be a potential or existing customer,

business client, employee, etc.

• P2A (Person-to-Application): a message sent by device controlled by a human being to a

software application, e.g. a social networking user uploading content to their profile, This

definition of mobile messaging for this report does not include M2M (Machine-to-Machine)

messaging which is covered as part of a wider study of the entire M2M ecosystem – more details

are available on Juniper Research‟s website.

For the purposes of our forecasts and in general discussion, we refer to a single division in mobile

messaging, that of P2P and A2P (that latter including P2A). A2P and P2A are referred to as one within the

industry due to the fact that these types of messages are often two sides of a „conversation‟. For example,

a customer (person) sends a P2A SMS to their bank (or rather, an application on its server) requesting

account information, and the bank (application) sends an A2P SMS back to the customer (person) with the

requested information.

Uses Cases of A2P SMS

SMS has become much more than just a means of facilitating personal or business conversations. The

section below explores just some of the other numerous uses of SMS.

Whitepaper ~ A New Era for Messaging

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i. Ticketing

SMS are being used as tickets by transport services and sporting and entertainment event promoters. An

example of this is the one provided by Andrew Bud of mBlox during an interview with Juniper Research.

a. Case Study: Swedish Rail SJ AB

State-owned Swedish Rail SJ AB is the leading rail operator for public transportation in Sweden and sells

over 40 million tickets each year. The rail operator was looking for ways to improve customer service,

while reducing cost in the ticket sales and distribution process.

According to the Swedish Post and Telecom Agency, SMS penetration is higher (90%) than WAP (50%)

and MMS (25%), and so was the ideal technology to mobilise eTicketing. The application took just 12

months and 8 million SEK ($1.1 million USD) to roll out1. Bud told Juniper Research that 20% of long

distance railway tickets in Sweden are now delivered by SMS2.

Global Market for A2P SMS

Juniper Research is forecasting that the global revenues for A2P SMS will be worth $70.1 billion by 2016.

North America was the largest market for A2P SMS in 2010, and will remain so throughout the forecast

period – 2010-2016. Western Europe will become the second largest market in 2013 and will consolidate

this position for the rest of the forecast period. Far East & China – currently the second largest market –

will see lower levels of growth: one factor behind this is the collapse of the ringtone market and maturity

of the ringback tone market which are delivered via premium A2P SMS – the latter of which is a market

almost wholly existent in China.

Figure 2: Global Revenue from A2P SMS Split by Eight Key Regions 2016

Source: Juniper Research

1 http://www.mblox.com/_files/SJ-SwedishRail.pdf 2 Juniper Research interviewed Andrew Bud, Founder, Chief Strategy Officer and Executive Member of

the Board at mBlox in March 2011

North America

Latin America

Western Europe

Central & Eastern Europe

Far East & China

Indian Sub Continent

Rest of Asia Pacific

Africa & Middle East

A New Era for Messaging

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Order the Full Report

Mobile Messaging Markets: SMS, MMS, IM & Email Strategies

2011-2016

This whitepaper is taken from Juniper Research‟s report “Mobile Messaging Markets: SMS, MMS, IM &

Email Strategies 2011-2016”. This strategic assessment of the key sectors within the mobile messaging

market delivers a valuable appraisal of the opportunities for SMS, MMS, mobile IM and mobile email. This

second edition provides the most detailed view of the current and future mobile messaging market to

date.

The extensive forecast model covers three in-depth chapters. SMS and MMS forecasts are broken down

by P2P and A2P messages, and A2P messages in each case are broken down by standard and premium-rate

billing. Key metrics include the number of users, average usage, traffic, pricing and revenue. For mobile

IM, forecasts include the number of users of different business models, average usage, pricing or CPM, and

revenue or adspend. The number of users of mobile email is also forecast. The report explores a shift in

monetisation of the messaging industry, presenting vital analysis of the strategic focus of operators and

network hub providers as well as an examination of the various business models employed within the

value chain.

Key Questions the Report Answers:

• In which regions and in which countries are SMS and MMS traffic highest?

• Which operators in which regions are most effectively monetising SMS and MMS?

• What is the balance between A2P/P2P and standard/premium messaging and how is it changing?

• In what new ways is messaging being utilised, aside from P2P communication?

• Which other forms of messaging pose a threat to the establish SMS/MMS technologies?

• How are mobile IM services being monetised and are they a significant source of revenue?

For more details on this report visit the website http://www.juniperresearch.com or phone +44 (0)1256

830001.

Juniper Research Limited

Juniper Research specialises in providing high quality analytical research reports and consultancy services

to the telecoms industry. We have particular expertise in mobile, wireless, broadband and IP-convergence

sectors. Juniper is independent, unbiased, and able to draw from experienced senior managers with

proven track records.

Publication Details

Publication date: May 2011

Author: Daniel Ashdown

For more information, please contact: Michele Ince michele.ince@juniperresearch.com

Juniper Research Limited, Church Cottage House, Church Square, Basingstoke, Hampshire RG21 7QW

UK

Tel: UK: +44 (0)1256 830001/475656 USA: +1 408 716 5483 (International answering service)

Fax: +44 (0)1256 830093

Further Executive Briefings and whitepapers can be downloaded at http://www.juniperresearch.com