There is no doubt that a number of new and upcoming messaging services are beginning to dig into core SMS markets, eroding traffic growth among important user groups, such as the market-leading youth and young-adult segments. Messaging services from Facebook, Apple, RIM, and others threaten the dominance of SMS in the huge North American and European and Asian markets, but these changes are not happening as fast as some think, and it is important not to panic. While these new services are growing, the installed base of regular SMS and MMS users still offers such a massive opportunity in mobile messaging, and traffic is still growing fast.

Interestingly, at the end of 2010, total worldwide mobile subscribers stood at nearly 5.3 billion. This subscriber base is projected to grow at a Compound Annual Growth Rate (CAGR) of 6.9 percent between 2010 and 2015, and is expected to reach nearly 7.4 billion by the end of 2015. The worldwide mobile messaging market was worth USD 179.2 billion in 2010. This number is forecast to rise to USD 209.8 billion in 2011, and on to USD 334.7 billion by the end of 2015, at a CAGR of 13.3 percent between 2010 and 2015.

The Asia Pacific region generated the highest mobile messaging revenue in 2010 and Latin America produced the least. Among the 4 mobile messaging services scrutinized in this popular report, SMS yielded the highest revenue for operators in 2010, followed by MMS, then mobile e-mail, and finally mobile IM. SMS made the highest contribution to worldwide mobile messaging revenue in 2010 with a 63.9 percent share, followed by MMS with 18.1 percent. Mobile e-mail revenue made up 14.2 percent, and mobile IM’s 2010 share was 3.8 percent.

SMS is a phenomenal revenue generating service. In 2010, worldwide SMS revenue stood at a staggering USD 114.6 billion and is forecast to grow at a CAGR of 6.8 percent to reach USD 159 billion by end-2015. However, it is expected that post-2011, the growth of worldwide SMS revenue will slow down due to the falling prices of SMS and the growing popularity of other data services such as mobile broadband, e-mail and IM. With close to a 40 percent contribution to worldwide SMS revenue in 2010, the Asia Pacific region continued to generate the largest regional share of SMS revenue worldwide.

From Then to Now: The History of SMS
 The first SMS was sent on the Vodafone UK network from a PC to a mobile handset in December 1992, but the first P2P (Peer-To-Peer) SMS, from one mobile handset to another, was sent by a Nokia engineer in Finland in 1993. SMS has witnessed phenomenal growth since then, leaving behind all other mobile data services. From just 146.4 billion SMS in 2000, annual traffic volumes have risen to over 6.9 trillion SMS over full-year 2010.

Messaging still dominates non-voice revenues worldwide. Earlier in 2011, we read the results from a late-2010 industry survey, conducted by another well-known and well respected research company, which revealed that among mobile industry executives, opinion (not fact) is that messaging is now contributing significantly less than 50 percent to worldwide mobile data revenues, in 2011. The survey asked respondents how much various services, such as messaging, apps, access, and others, would contribute to mobile data revenues in 2011. Their opinions revealed that on AVERAGE, mobile industry executives believed that in 2012, messaging was contributing just 32 percent to worldwide mobile data revenues.

Incredibly, messaging in 2011 will still be responsible for more than 60 percent of global data revenues. In reality, SMS and MMS alone will contribute a massive 55.7 percent to global data revenues in 2011.

In North America, SMS and MMS alone will contribute close to 56 percent to mobile data revenues in 2011, and if you add mobile e-mail and IM to the mix too, then messaging will make up more than 60 percent of mobile data revenues in North America in 2011. SMS alone will still contribute 38.9 percent of total data revenues, despite this ill-informed perception among mobile industry executives that total messaging services will only contribute 15 percent to data revenues in that region.

SMS Still King
It seems clear that industry opinion is being distorted by media attention, which has focused on little more than smartphones, broadband, and apps since mid-2007. The respondents in the particular survey that we have referred to above, comprised of 68 percent senior executives/Directors, C-suite or EVP/SVP, and 55 percent of those respondents were from North America. It is of great concern that so many senior decision makers at MNOs, vendors, and other companies in the mobile ecosystem think messaging is worth so little to non-voice revenues.

We at Portio Research have said for a long time that SMS is the foundation and mainstay of non-voice service revenues, yet as a service it attracts almost no attention in the media and among the operator community, and this has worried us for some time. SMS is rarely the subject of any keynote presentations at leading industry events, and rarely the subject of headline news items, yet SMS has been, still is, and will continue to be for some time the leading revenue-generating non-voice mobile service anywhere in the world.

Worldwide, messaging will continue to contribute more than 50 percent of global non-voice revenues for some years to come. Our forecasts show messaging revenues holding up at around 55 percent or more even in 2015, and that’s in a market where total mobile data revenues are growing fast, yet messaging is still growing too and holding its leading position. SMS alone will continue to contribute 33.5 percent of mobile data revenues worldwide in 2015, to retain its position as the single biggest contributor. In 2015, even in North America, SMS will still generate 30.1 percent of mobile data revenues.
 
Source: Portio Research, www.portioresearch.com
For more information on purchasing this report, Mobile Messaging Futures 2011-2015, please email sales@portioresearch.com or visit: http://www.portioresearch.com/MMF11-15.html.

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