Gartner Says Mobile Messages to Surpass 2 Trillion Messages in Major Markets in 2008
Mobile Operators Should Plan for a Future Where Messaging Services are Fully Commoditized and Margins Greatly Reduced
Although mobile messaging traffic volumes will continue to show strong growth in many markets, operator margins on messaging services have become progressively thinner as a result of competition and market saturation. The compound annual growth rate (CAGR) for short message service (SMS) revenue in major markets worldwide from 2002-2006 was 29.8 percent. From 2007-2011, the CAGR for SMS revenue is forecast to be 9.9 percent.
"In many markets, there has been strong pressure on operator margins for text messaging services and this has been driven by often intense competition between carriers," said Nick Ingelbrecht, research director for Gartner. "At the same time, consumers have grown accustomed to large or unlimited bundles of inclusive SMS as part of their basic cellular service package. Carriers should plan for a future of much reduced margins on messaging services. They should develop messaging platforms, services portfolios and pricing plans that support the broader objectives of customer acquisition and retention, rather than short-term margin enhancements."
Asia/Pacific and Japan are the biggest consumers of mobile messaging. Gartner predicts 1.5 trillion messages will be sent in 2007, and the number will grow to 1.7 trillion in 2008. Volumes of short messages and picture messages will increase, but growth rates are expected to slow in line with the saturation of mobile connections. Volumes of photo messaging will start to stall in the next few years as users increasingly share photos through mobile communities and social network portals rather than sending them directly to one another.
Gartner estimates 189 billion mobile messages will be sent in 2007 in North America, and this is forecast to reach 301 billion in 2008. "The market is being driven by increased penetration of users, more frequent usage of peer-to-peer messaging, and unlimited and bucketed messaging plans," said Tole Hart, research director at Gartner. "There has also been some uptake of mobile e-mail via POP3 mailboxes and mobile IM service, but it's very small compared with the uptake of SMS. These services are used primarily as an extension to a PC. However, the market is seeing a number of consumers using BlackBerry and Palm Treo devices to access address books, phone numbers and e-mail."
Mobile messaging usage has increased in all Western European countries, and the growth in the number of messages sent is projected to continue until 2010. A total of 202 billion mobile messages will be sent in 2007 in Western Europe, and this is forecast to reach 215 billion in 2008. "However, due to competitive price cutting, an expected increase in international charging regulations and more unlimited bundles, the revenue generated from peer-to-peer messaging is tending to flatten and is even showing some decline from 2007 (this trend is affected by exchange rate variations)," said Stephanie Pittet, principal research analyst at Gartner. "Africa is expected to see sustained healthy growth and the low price of SMS compared with voice calls makes it an ideal service in countries where people have low buying power."
Mobile consumer e-mail has become more common, especially in the wake of higher smartphone adoption, improved usability and ease of configuration. Mobile IM will become a mass-market application similar to mobile e-mail in developed markets, initially being adopted by PC-based IM users, who are now able to access their service on their mobile phones, due to partnerships between the operators and the IM providers.
"To sustain growth over the next few years, carriers should look to social-networking applications to drive traffic, working where possible with popular established social-networking sites," said Mr. Ingelbrecht. "Mobile search and advertising also offer attractive potential drivers for SMS traffic, although most carriers appear poorly placed to support the end-to-end campaign management and reporting requirements of media buyers and advertisers."
Additional information is available in the Gartner report "Market Trends: Mobile Messaging, Worldwide, 2006-2011." The report is available on Gartner’s Web site at www.gartner.com/...
Gartner UK Ltd
Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to 60,000 clients in 10,000 distinct organizations. Through the resources of Gartner Research, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,000 associates, including 1,200 research analysts and consultants in 80 countries. For more information, visit www.gartner.com.
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