The evolution of messaging
Since the advent of SMS messaging two decades ago, this method of communication has become a solid revenue stream for operators with over 350m SMS messages sent every day in the UK alone. More recently, the rapid adoption of smartphones and the increasing demand for mobile data – which soared fortyfold in the three years leading up to 2010 – means a new platform has been created for ‘always-on’ instant messaging. Mobile operators are already experiencing and acknowledging a change in consumer needs with the development of high-speed, 4G networks that will enable and facilitate VoIP. They will also need to brace themselves for a shift in demand towards the enhanced experience provided by mobile instant messaging services.
BBM has been leading the way in smartphone messaging with over 45m users, but the market is undergoing a radical shift with the release of Apple’s iMessage –giving access to over 200m existing Apple devices. Apple’s strong presence in the market will mean that there will be a significant uplift in usage along with an overall increase in awareness of smartphone messaging within the market as a whole. Soon, smartphone instant messaging applications will come pre-installed on many new smartphones, including those of Samsung who have announced their own service ‘ChatON’. With overall smartphone acquisition also on the rise – the potential for growth is huge.
UK consumers are looking for a cost-effective and enriched messaging experience
Research gathered by GfK shows that around a third (30%) of UK smartphone owners are currently using some form of instant messaging on their phone, and this figure is even higher in the US.. In the UK, consumers use the service because it is cost-effective – linked with the ability to send messages internationally at no extra cost – and quick. Interestingly, US consumers are much less likely to consider cost and are more likely to use the service because it is quick and reliable. Related to this, they are also less likely to be driven by the ability to send international messages. However, what is common in both countries is that users are looking for a richer experience with messaging than they currently get with SMS and are attracted to the enhancements that smartphone instant messaging applications provide.
User experience is driving the adoption of smartphone instant messaging with UK consumers, stating that they use it because of the facility to enrich messages with images or video, obtain read receipts and easily chat with groups of friends. One in five users stated that one of the main reasons that they use smartphone instant messaging is because they generally prefer the experience to SMS. Users are keen to escape the constraints of SMS messaging where they often have to watch their monthly allowance or keep the message under a certain character count. This user experience will become even more important to differentiate messaging services and smartphone brands as the market matures.
The market is changing rapidly
BBM has been leading the way in the market so far as the only smartphone manufacturer to offer an integrated smartphone messaging solution, making it a unique selling point for BlackBerry devices. GfK found that 85% of UK BBM users agreed that the service is easy to use and nearly half (48%) would be less likely to change brand of phone just because they would lose access to BBM. However, with other smartphone manufacturers now scrambling to offer identical services on their own handset models, BlackBerry will have concerns that they could lose some of their customers. Of those users that were reluctant to change brands because of BBM, 68% agreed that they would be more likely to consider switching brands as long as it offered a service similar to BBM. In particular, Apple’s strong brand presence means that their entry into the market could significantly impact consumer perception and awareness around smartphone messaging – driving additional demand for these services.
Incompatibility is a barrier to adoption
The present state of the market has a number of key limitations that are creating barriers to the adoption of smartphone messaging. Namely, being restricted to different operating systems – for example, BBM only working on BlackBerry and iMessage only on Apple devices. Although cross-platform alternatives like WhatsApp and LiveProfile exist, they are not as reliable or as easily accessible as a built-in solution. In future, consumers will need a service that will be recognized by all smartphone manufacturers and network operators, and will overcome the barrier of OS compatibility. The development of an ultimate alternative messaging service such as this could see adoption soar, leaving SMS behind.
The dawn of a new era in communication
Consumer demand for mobile instant messaging services is undeniable and the market will continue to shift towards mobile, data-based communication methods like mobile VoIP and smartphone messaging. GfK found that 59% of UK IM users would stop using SMS if they could reach all of their friends using instant messaging. Mobile operators are facing this change daily as more contracts with data allowances are replacing the traditional minutes and texts packages.
Although the current limitations of smartphone messaging means that SMS is unlikely to be phased out entirely, there are signs that SMS growth will slow in the next 10 years. In order for operators to recoup SMS revenues, they should be ready to collaborate with manufacturers to provide the ultimate alternative messaging experience that would be available on all Internet-capable devices – abolishing the barrier of incompatibility. The smartphone messaging market is now at a pivotal point, with developments over the next couple of years being crucial in shaping the future of mobile communication.
 Ofcom August 2011
 GfK TechTalk ‘VoIP is here to stay’
 GfK Omnibus Data July 2011