Have IM Apps Made SMS Messaging Irrelevant?

Earlier this year there was big news. WhatsApp users were sending more messages each day than SMS users were sending. According to the Telegraph, WhatsApp was 50% more popular than SMS messaging.

And the truth is the number of SMS messages sent each day has declined over the last few years. In the UK it was down almost 25% from 2012 to 2013.  In an analysis done on his blog, Benedict Evans charted SMS use in various countries, and almost all of them peaked between 2011 and 2012 (France being the biggest European exception to the trend). His chart only went through 2013 though. According to Statista, however, the decline continued in the UK through 2015 (so far).

Looking at those stats, you might bet SMS messaging won’t be around for long. But you’d be wrong.

The facts are true of course, but like any statistics, it’s all in how you look at them. Here’s what I see.

People are communicating more using apps than SMS. Generally this is with friends or groups of friends. For example, I use Line for many of the gaming communities I belong to. I also belong to groups that are stubbornly stuck on using Facebook for group interaction. Many apps, like WhatsApp and Line, make it easy to chat with groups of people, as well as one on one conversations. They also have fun things like stickers which offer more, ah, expression possibilities than the average emoticon.

But to use the apps, your friends and family need to install the same one. And if not everyone agrees on the app (remember that FB group I mentioned?) then conversations can be disjointed at best because there may be chats in more than one place.

The apps are also “free”. People get the sense they can chat as much as they want and it doesn’t cost them extra. That isn’t exactly true because depending on the app and what is being sent (i.e. pictures) they could be using data, which is often limited on many mobile plans. But people also think of SMS messaging in terms of pay-per-message, so the apps feel free even if they aren’t actually free.

So all these people having casual conversations with friends on apps have led many to conclude SMS is on the way out. But there’s a problem with that conclusion. It ignores all the other ways SMS is being used, and all the other types of organisations that use it.

Probably the biggest factor that all but guarantees SMS use will remain is application to person (A2P) use cases. This is when a company sends SMS messages to a person directly from one of their applications (meaning business applications, not mobile “apps”). A great example is a bank sending an SMS notification of a deposit to the person’s account. Another example is an appointment reminder sent directly from an organisation’s scheduling software to a person’s mobile number via SMS.

The global A2P SMS market is set to grow at 4.2% CAGR between 2014 and 2020 according to Transparency Market Research. That’s the equivalent market value of about £46B in 2020. I don’t know about you, but that kind of growth doesn’t match up with the idea that SMS is being replaced with apps.

Is there anything besides A2P helping to keep SMS relevant? There certainly is. Mobile marketing is continuing to grow, and SMS is a huge part of that sector. While brands experiment with custom apps, and marketing on IM apps, most are still relying on SMS as the only mobile technology that lets them reach every possible customer. There’s no barrier to the customer using SMS – no app to install, or notification system to circumvent.

Another potentially huge market is SMEs. These companies may not have the resources for custom apps, or the marketing budget to hit more than one or two channels on mobile. Using SMS ensures they can cost effectively run a mobile marketing campaign and grow their business even more. Many businesses have also found that using SMS for internal communications helps reduce costs and streamlines operations.

As Evans notes in his blog I referenced earlier, there’s absolutely no way any of us can predict how the mobile IM app market will shake out in the coming years.  There’s so much competition at the moment it may be that it never settles down, or something else might pop up to replace it entirely.

But will A2P, mobile marketing or the SME sector using SMS be enough to alter the downward trend of global SMS usage? I’m willing to hazard a guess it won’t. Not initially anyway. There are millions, no, billions, more people potentially using IM chat apps than companies or applications who use SMS. But at some point I do think the trend will level off. Unless something else comes along to replace it that is. And that probably will happen someday. But SMS is old technology that’s still finding  and growing in relevance today.

So while the world of IM apps is unsettled and chaotic, SMS is steady as she goes. What do you think about the future of SMS? Is the technology ubiquitous enough to stand the test of time, or will apps eventually make it obsolete?