Research Notes

Smartphones are helping kill SMS:

– Most new smartphone models cannot see the difference between a cheap e-mail and an expensive SMS. How is this affecting mobile operators and what can they do about it?

It is no secret that smartphone penetration has exploded. But how many mobile operators have analysed the effect the many new communication clients/applications that are now running on smartphones are having on their SMS revenue – revenue that historically totalled almost 20% of many mobile operators ARPU?

For the past three years Strand Consult has worked on a large project where we examined the whole smartphone market development and the effect it is having on mobile operators and their business cases. The question that arises is whether smartphones are really as good business as many claim them to be?

All this started back in 2009, when we launched our iPhone market report . The report examined the market from an operator viewpoint and could document that iPhones were not having any positive influence on the mobile operators’ bottom lines. Since 2009, the report has been distributed to over 15,000 people in the mobile industry. We can see from the enormous amount of feedback we have since received from mobile operators around the world that our conclusions were correct.

We now see that the smartphones that are now being launched have a significantly different user experience in a number of areas, compared to the first smartphone models that originally hit the market.

One of the areas where the user experience has greatly developed is within the communication clients that customers use for SMS, MMS, e-mail and other types of communication via social media. Originally customers needed to have one individual client/application or service. In other words they needed one application for e-mail and another for SMS etc. Each time the customer wanted to communicate with someone else they needed to decide which type of communication and application to use and make sure that the person they wanted to communicate with had been added to that application.

Many new smartphones now on the market have a contact client that handles all your contacts for family, friends, colleagues, club members etc. For each contact you simply type in which communication platforms that contact is using e.g. SMS, MMS, e-mail, Facebook, SM end, Skype etc.

When you want to get in touch with one of your contacts, the smartphone then selects which platform to launch that is being used by that contact. For the customer it feels like all communication across SMS, MMS, e-mail, Facebook, MSN and Skype becomes more seamless and the customer does not have to worry about how to communicate with any individual contact and can instead focus on who they are communicating with and what they want to communicate.

There is no doubt that these types of contact applications are moving SMS traffic away from the mobile operators and over to other forms of communication like e-mail, Facebook and the many other applications that are taking advantage of the flat rate data subscriptions that many smartphone customers now purchase as part of their mobile subscription.

Strand Consult believes that many operators have not adapted their strategy and business models to correctly handle the many challenges that the developing smartphone market is producing. And the decrease in sent SMSs that mobile operators in Denmark and Norway have already seen is only one of the smartphone generated problems – other challenges are looming just around the corner.

Strand Consult has created a workshop concept based on our extensive research and experience in this area. The workshop helps mobile operators structure their smartphone strategy to better prepare for some of the smartphone challenges that mobile operators around the world will be facing in the near future.

If you would like to learn more about our workshop concept How to get success on the smartphone market please do not hesitate to Contact Us . We will then send you an outline that further describes how we view these upcoming challenges together with our iPhone market report from 2009 – our iPhone market report is still very relevant reading.
More information:
How to get success on the Smartphone market 

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