Don’t overlook SMS

May 16, 2007 | Zaw Thet | Comments | |

In the U.S., the promise of the future in accessing mobile information via WAP or a rich client application casts a shadow on SMS, better known as text messaging or “texting”.

According to conventional wisdom, WAP and downloaded client applications are the holy grails of mobile, with their ability to deliver splashy, colorful landing pages, images and videos to consumers on their mobile phones. Companies like AOL are snapping up WAP advertising startups like Third Screen Media with the belief that, as devices and networks improve, increased consumer adoption will follow.

But SMS is no underdog. It has huge adoption now, is very versatile and useful and is going to persist, even if the handsets and networks catch up to the hype being created around WAP and clients. It’s not like the industry is slamming text messaging, most just ignore it for the razzle-dazzle of newer technology. But some are realizing where the real volume is. Maybe more importantly, SMS has the highest overall usage rates in the US (37%) compared to WAP (14%) or rich clients (6%).

Why are people going to keep using SMS?

1. My mother can use SMS

SMS is simple. My mom can text message, but she doesn’t have a clue how to go to a website on her cell phone or download a client application. As much as people think they want the cutting edge technology, when you want information right now, you’re going to go straight to the quick and easy feature that you know how to use, which is text. Answers come quick, efficiently, and on any device, not just the newest and hottest.

2. People (including my mother) are using it NOW

I think the market’s default assumption is that it will eventually be able to replicate the web or a desktop experience on a cell phone. That assumption overlooks the widespread adoption of what’s already in most people’s hands. Unlike the new, and more expensive technologies, text messaging works for almost everybody, right now. People don’t change when they have a tool that already works. Eighty-eight percent of US Internet users said they used text messaging; WAP and clients didn’t even make this list.

3. SMS is asynchronous

That’s fancy talk for being able to do the following (not possible with WAP or a client): You can send an SMS, then turn off or put away your phone and get the response later. You don’t need to keep your phone open to wait for a page to download. You can also store the information from an SMS permanently in your inbox

4. Check out Europe and Asia

Take a look at how SMS has taken off in Europe and Asia. In the UK, you can get local election results via SMS. You can order a pizza or a taxi via SMS. Despite access to faster networks and more advanced handsets, in Asia as much as 72% of mobile revenue comes from text messaging.

5. Pushing the Possibilities

The fact that SMS is the only true “push” mechanism for mobile information makes it quite powerful. Want sports updates or traffic information sent to you automatically? The only mobile medium for this type of service is SMS. Although users can visit WAP sites or receive email on their phones, SMS has both the simplicity and the immediacy to encourage ongoing usage and wide adoption. Also, anyone can receive a text message alert. They can set it up on the web and still get the value of staying in the know on the go. They don’t even have to know how to send a text message!

Today, SMS accounts for approximately 75 to 80 percent of non-voice service revenues worldwide. Despite all the noise around WAP and the latest technologies, most of the action is in SMS. Traditional media companies (online, print, TV) and advertisers are taking notice. I’m not saying that browsing the web on your phone isn’t going to become better and that new handsets won’t continue to offer great experiences. You absolutely need to be able to browse for some things. Just don’t overlook SMS: this technology isn’t going away.

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Photo of Zaw Thet

About the Author, Zaw Thet

Zaw Thet is CEO of 4INFO (http://www.4info.net), a mobile search company delivering information via text-messaging.

Zaw was previously a director at Spoke Software, and co-founder and CEO of GetInventory, a web-based supply chain management company. He has worked for IBM and was a special consultant to the San Francisco 49ers.

He advises several start-up companies, including AGLOCO, Aggregate Knowledge and BrightRoll.

Zaw has an MBA from the Stanford Graduate School of Business and a BA from Stanford University in Political Science.

  • You've left out the obvious advantage of SMS over richer data: you can pay a dime per message rather than signing up for a two-year contract for a $100 a month plan.
  • Thanks Diana. That's a great point I must have just taken for granted. A lot of people don't want to pay for data plans, but are more than happy paying a smaller amount for individual SMS messages or a package.
  • Also, SMS seems more useful. I don't need TV on my phone, but I do need to occasionally text my fiance and see what she wants me to bring home for dinner. There's a lesson there I suppose, for people developing apps, simple and useful is better than pretty and useless.

    GJ
    http://www.60in3.com
  • Actually I don't want to pay for SMS either--imagine if we had to pay for each e-mail sent and received, or web page visited.

    Lots of good points, Zaw.
  • Tom
    Earlier this year I posted on a study that found that 56% of respondents would prefer to receive "valuable" advertising on their mobile exclusively via Text Messaging. Needless to say that is pretty compelling stuff!

    Zaw, when is the Canadian launch for 4INFO? Keep up the good work!
  • Mimi
    Zaw, well done. Keep up the good work. When are you launching in the UK?
  • Monika
    Well done Zaw, you are taking SMS to a whole new level. I admire what you are going with it, keep up the great work. I look forward to seeing what you will do with SMS next.
  • Nice post, Zaw. Just curious -- where did you get those stats about usage in the US? SMS vs WAP vs client.
  • Paul Grim
    Zaw,

    Right on the money. I keep seeing great mobile apps from companies who then say, "All you have to do is download the app..." and I shudder.

    Also don't forget the economics are better for the network operators as well as consumers! SMS started out life on the SS7 signalling channel, which was virtually zero incremental cost for them. But even now with interconnect charges, etc., it's still dirt cheap compared to other data delivery methods.

    SMS as a share of data revenues (not traffic) may drop off through, with the new all-you-can-eat SMS/IM family plans in the US. To the great relief of many a teenage parent -
  • Terence
    Ok... but. I don't know how it works in the US, but SMS advertising has to go through a lot of constraints imposed by the carriers. Plus I think it's much easier to feel burdened by the number of ad messages you receive, ie. I don't see how it would scale. Having said that (and despite of it), it's silly to dismiss SMS, I agree. But you can't overlook some of the reasons why wap and rich clients can be appealing.
  • Mae Hla
    Great job, Zaw! Mi Mi's question about launching in the UK is very relevant. I've seen that people there(including those probably older than your mom) have been into text messaging long before mobile phones use exploded in the US.
  • ALI
    Interesting. SMS will definitely have its own place in the mobile ad ecosystem given that it allows push advertising to be stored in a mini-inbox. This could be a great avenue for click-to-call advertising in the future.
  • Thanks to all for the comments here. Great discussion. I wanted to add a couple of notes on the post and answers questions posed about 4INFO:
    - The usage data was pulled from NOP World, which was a 2006 Enpocket Mobile Media Monitor study. It may be slightly different now, but the general percentages remain the same.
    - 4INFO is now much more than just a mobile search company, we've also deployed the largest SMS Ad Network in the US (including a revenue positive Publishing Platform for our partners).
    - We'll expand to Canada and the UK sometime in 2008 once we've got the US market figured out. These things take some time and focus. :)

    Thanks again,
    Zaw
  • Ok, I'm convinced. I want to offer an SMS interface to my app. So what's the best way to get it setup? How do I go about getting a short code and how much does it cost?
  • Everybody forget one factor, in USA, receiving SMS will cost you money. But in other countries, such as China, it is free to receive the SMS, the person who sends the SMS has to pay, which is much better business model.
    This is why SMS is more popular outside USA and service providers can make more money from SMS service.
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