Peter, Thanks for a thought-provoking and certainly, well-researched counterpoint. Here are some thoughts: Peter Beckman wrote:
Because while it probably will be swallowed by something else someday, it's here now, and there is a demand for it.
I suppose that, in light of perpetual change, the presence of something in the acute here-and-now is always a capitalistically appropriate observation.
It's a ubiquitous service that if you know the DID is a mobile number (or SMS-enabled virtual phone number), you can send an SMS and you can be confident that your message was likely displayed on the end-users phone (or email, or something). You don't need to have AIM installed, or know their handle, or use some third party service. You know the phone number? You can send a text message.
Yes, that is an apt description of how SMS works. :)
I'm surprised you see this as a bad time to put money into SMS-related services. 1.9 to 2 million tweets per day [1][2] -- lots of money and development going there. 4.1 billion SMS messages sent per day in the US alone [4] (3.5 billion per day in 2008 [5]). If you don't see a revenue opportunity there, then Alex, we need to have a beer. :-)
I'm always up for a beer. There are two ways to see this; one is that use of SMS is a growth market opportunity, and another is that the mushrooming diversity of applications for SMS is rapidly straining its capabilities and usefulness as a medium and only accelerating its expiration. As aspects of the mobile experience apart from straight voice calls stand now, there are two categories: (1) Plain text messages of <= 160 characters, almost always metered or requiring a comparatively expensive unlimited plan byte-for-byte. Strength: Ubiquitous on all types of mobile handsets. (2) Everything else data (web, e-mail, umpteen gazillion iPhone/Blackberry/Pre/etc. apps, etc.). Generally unmetered, and where metered inexpensively byte-for-byte compared to SMS. Weakness: Presently confined largely to higher-end phones and service plans. Strength: A thousand times more useful, extensible and adaptable than plain text, unleashes a completely new generational set of capabilities for mobile devices that makes them strikingly similar to little interactive computers. Much richer user experience. ... Now, the smartphone market has grown significantly in the last two years with the introduction of the iPhone and its cohorts, even among casual non-business consumers. I assume it is not controversial for you that smartphones are going to become more common and cheaper (Google is pushing that _really_ hard, among other things). I also assume it is not controversial that more and more features presently associated with higher-end smartphones will creep into the next generations of lower-end consumer-grade handsets and over time raise the capability floor on the bottom. Additionally, I assume that these structural changes are no more than a few years off at most, especially in the North American & W. European markets. Given those premises, as it becomes more and more possible to utilise data/Internet/IP/3G on an ever-expanding class of devices more affordably, where does SMS fit into this picture? Given its generational obsolescence and incompatibility with these emergent but soon to be more mainstream categories of user experience, I suggest that it's going to rapidly become irrelevant, although there is no doubt that the carrier and aggregator/clearinghouse racket that lines its pockets with it will do its best to slow the trend down. Your mention of Twitter is interesting. Twitter was originally designed around SMS because at the time of its inception that was still an almost exclusive means of realistically disseminating text to mobile devices. With the advent of the iPhone & the App Store, and copycat attempts at similar ecosystems and marketplaces by competing vendors, it is possible to equip nearly every mainstream smartphone now with at least one Twitter client of some description. Despite the fact that those applications must be explicitly invoked, their interface is certainly richer, more powerful and easier to use than the comparatively crude SMS gateway into Twitter. And it's a matter of time before all that evolves in a more "push" direction to erase the perceptual distinction between an asynchronous incoming SMS vs. a Tweet produced by a client application, as many instant messenger clients already do on those devices. Do you really see Twitter as an example of a major growth path for SMS at this point, rather than a vestigial aspect? Maybe we really should have that beer. :)
There are 6.4 billion minutes of use on the wireless side of things alone made every day in the US [6], and we're all over that, even with slim margins (I couldn't find a source for total number of minutes of use per day in the US across landline and mobile). 4.1 billion SMS messages is more that the number of phone calls. It'd be nuts NOT to invest in that, especially if you are already investing in VoIP/Telephony. Sure, it may disappear eventually, but right now it's a pretty huge deal. Make your money while it's hot.
You're leaving out one significant downside that isn't present with VoIP at large: the SMS economy is very closed and cornered by a very limited number of suppliers, as the preceding discussion in this thread has borne out to some extent. Also, there's a significant CAPEX formula to consider. Last time I checked, there weren't any ILEC and major mobile operators' representatives with strategic decisionmaking power subscribed to the list. We're all small to medium companies here, and should do the things that are most profitable for smaller companies. Small companies gain an advantage through maneuverability, innovation and thinking ahead, while large companies excel at wringing every last ounce of value out of mature product that exists now and optimising already sunk investments for maximum profitability. None of us have umpteen gazillion dollars to throw at ephemeral, short-term opportunities. All the carriers want to stall their inexorable march toward the role of commoditised "dumb pipes" for third-party applications and services, but we know that's what's going to happen -- it's just a matter of when. If I'm right and SMS is a sinking ship due to the _rapidly_ evolving capabilities and downward-trending cost (per unit of functionality) of the mass-market mobile handset, you should be thinking ahead, not belatedly hustling your way onto a crowded bandwagon. The mobile handset today is capable of far more sophisticated two-way data transmission than ~160 character text messages, and that capability is _already_ mainstream in certain segments. Are you really suggesting that in December 2009, money should aggressively be poured into an overpriced, borderline mafia-regulated ~10 year old method of delivering short, plain text messages consisting of about two lines of 80x24 terminal text? -- Alex -- Alex Balashov - Principal Evariste Systems Web : http://www.evaristesys.com/ Tel : (+1) (678) 954-0670 Direct : (+1) (678) 954-0671