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Tuesday, May 07, 2013

There is no "messaging market"

I keep reading ridiculous articles talking about SMS, so-called OTT applications like WhatsApp & KakaoTalk, Facebook, and of course my favourite RCS/RCSe/Joyn family of services.

A central theme in these articles is a supposed battle for the "messaging market", with lazy journalists or vendor marketeers painting a dark picture of mortal combat between the righteous fortress of SMS revenues, the marauding hordes of barbarian OTT players at the gates, and the Knights of Joyn riding to the rescue in their shining armour of interoperability.

This is all palpable nonsense - a strawman argument to reframe a complex and dynamic situation into the usual fatuous and imaginary Us vs. Them, Telcos vs OTTs narrative, coupled to a desperate attempt to make RCS and its GSMA-branded offspring look relevant.

Not only is this argument flawed, the likely outcomes will in many cases be worse than useless.

There is no "messaging market" today, and there certainly won't be tomorrow. We have multiple different mechanisms to send "messages" across the Internet and between phones today - and more to the point, many, many reasons and contexts for wanting to do so.

The idea that a "he said, she said" gossip via SMS is in any way equivalent to sending a signed NDA via email is ridiculous. Almost as ridiculous as equating a WhatsApp chat between friends, to a online-customer support IM session embedded in a software company's web-page.

You might as well say that there's a market for "sending things coloured blue", as it makes no less sense than a market for "sending messages". It's just more difficult to count.

For most of the last 15 years, the bulk of messages have been sent by SMS (mobile-to-mobile or server-to-mobile), Internet email (PC-to-PC, server-to-PC, or PC-to-mobile) and Internet IM (mostly PC-to-PC). And because emails are generally longer and "richer" than SMS, nobody has bothered to talk about the risks of messaging substitution between them.

As Internet access and apps have appeared on mobile phones, unsurprisingly we've seen an upsurge of both email and IM on devices. We've also seen a massive growth of other ways of sending messages such as push notifications, and especially in-app messaging for social, enterprise or gaming purposes. Quite often, we'll get the same message - or a notification - sent through multiple channels simultaneously, or to multiple devices, so there is rampant double-counting too.

There are actually three- or perhaps more - completely separate trends occurring:

1) SMS is losing its crown as the "standalone" mobile short-message platform of choice, because it is overpriced by around 100x, and hasn't evolved in feature-set in 20 years.
2) Standalone messaging is starting to diminish as it becomes easier and better to send contextualised messages
3) People only need any-to-any interoperable messaging when there's nothing better available. Most of the time, they're contacting friends or colleagues who'll have whatever app of choice works best in that group.

The key thing here is "purpose". SMS and email are (to a fair degree) general-purpose tools. Jacks of all trades and masters of none. An SMS can be a notification of a delayed flight, directions to meet your friend in the pub, a spam advert, or a way to send configurations & settings to your phone. Emails are similarly diverse.

General-purpose tools are fine when specialist tools are unavailable, expensive or inconvenient.

Do you think anybody would use a Swiss-Army Knife to open a bottle or cut a log, if the person had a magic app on their phone, or in their browser, that could instantly manifest a proper corkscrew or saw, at zero extra cost?

Moreover, would anyone other than Victorinox & Leatherman care about the demise of the pocket multi-tool market? Would they be stupid enough to try to create a new "Rich Tool Suite" standard between them, with interoperable and modular scissors and blades that could fit into a new generic multi-purpose tool body? And would industry analysts start adding together manifestations of tweezers and hacksaws to try to draw numerical comparisons with the legacy multi-tool market?

Just as I've previously mentioned that there is no "video" market, and increasingly no single "voice" market, there is already a clear fragmentation in messaging as well.

Yes, for any given use-case there are overlapping Venn diagrams which demonstrate substitution. I can tell my friends which pub I'm in using SMS, Facebook chat, WhatsApp or Twitter DMs if I wanted to. I could send my signed & scanned NDA to a client via email, Dropbox - or even fax or by mail.

Adding together some arbitrary subset of messaging tools - SMS + OTT apps, for example - but missing out push-notifications, emails, HTTP in-browser IM and so forth AND neglecting to de-duplicate where single messages...

... are cut into...

... chunks for convenience & readabilty...

or where the same message is sent & notified by multiple paths, just means that the data is spurious and the analysis sloppy. You never see any segmentation of messaging by purpose, except perhaps for person-to-person vs. app-to-person.

Any worthwhile analysis would look at various ways to slice up this supposed monolithic market into separate buckets reflecting context or intent. Perhaps social messaging vs. advertising vs. standalone information vs. gossip vs. B2B meeting arrangement vs. one-way app updates. Or sliced by length of a messaging "session" or number of participants, or a hundred other ways.

That type of analysis would also point out why the rhetoric around RCS and Joyn is a mistake. The market for general-purpose messaging is fragmented, declining in relevance, and simply not going to be very valuable in the future. WhatsApp's 1$-per-user-per-year price point is a good indicator of where it's going. Operators ought to be segmenting the messaging space by intent and developing laser-like tools where they can differentiate, not wasting time and resources on creating a lowest-common denominator Rich Tool Suite with the added costs and politics of IMS and vendor hype.

Moreover, the random selection of "capabilities" in RCS is the same set of pointless ideas for services that have been around for at least 10 years. "See what I see", "File Transfer", and old-fashioned and useless forms of presence? That's Yahoo Messenger from 2003, not a modern mobile communications app - see Vine's video clips, or Facebook's chat-heads, or WhatsApp's "last seen online" for some ideas about application *design* rather than engineering.

The irony is that the telecoms industry has been greedily absorbing $100bn+ a year from SMS and MMS, yet has plowed back almost zero into R&D and messaging application design. No sympathy or regulatory recourse whatsoever is due for telcos, as that market collapses - it has been a dead man walking for years. It has been neglected by companies asleep at the wheel and unwilling to innovate - there isn't even an easy "report as spam" function, or a way to switch to whitelist-only.

To be honest, I think WhatsApp and its peers will face challenges too - not only is it targetting a standalone messaging market that will implode in value, but it's doing so with constraints like using phone numbers as identifiers. That's already looking clunky in a multi-device user world, especially where many are WiFi-only.

Just as with voice communications, it is wrong to think of messaging as a meaningful and homogeneous "market". In most cases, messages will be sent as a feature or function of something else, not as a "service". There will be diminishing need - and diminishing value - in standalone, general-purpose applications. The true value will lie in many separate areas and business models, reflecting the myriad reasons why people or machines want to send messages in the first place.

So stop talking about the "messaging market", stop counting messages and drawing faulty conclusions from easy/lazy-to-quantify numbers, and start thinking about Purpose, because that's where the value lies.


Lara said...

Hello Dean

Super article! Thanks for that. Very refreshing to read something other than the usual text that bulks SMS into one homogenous form.

You might like this - http://www.unwire.com/about/news/say-what-you-will-sms-is-alive-and-kicking/.

Anonymous said...

Thanks for making me laugh this morning. In case you are interested, I estimate that currently 14.2857% of SMS messages are coloured blue on the basis that blue is one of 7 colours in the rainbow.

Jason said...

Dean, Thanks for the insight, it was well thought out, great analysis. I wanted to toss out a few thoughts that came up while reading your article. R&D money is being spent within the carriers to evolve or replace messaging platforms. I agree that there is no market, but it is feature parity with ip application service and an existing table steak for most operators. One of the smart things the telecoms have done, is adopt a standard (IMS yeah yeah its not perfect but its something), so have the equipment vendors, to ensure the gazillions of customers they serve can continue to have the same feature set in 4g as they have had in 3g. RCS messaging may seem simple, but its not. WhatsApp messaging may seem simple but its not. WhatsApp will have to be dependent on a great access path to be available to deliver its messages, so does the carrier!*laughs* At the end of the day, OTT isnt a threat its an opportunity to 1. hone the services in the operators network 2. identify the behavior of how the services (messaging, voice, video, etc) are being used 3. use that data to create context for the operators business enabling more productive decisions about the direction networks & services. it will be a good story in 10 years, to see how the networks and services evolve.

mailme back said...

Very interesting article about Text message marketing great analysis! Jason Might be right OTT isnt a threat its an opportunity to 1. hone the services in the operators network 2. identify the behavior of how the services (messaging, voice, video, etc) are being used