USA: Can Enterprises Save SMS?
By Joachim Bamrud, Mon Jun 25 00:00:00 GMT 2001

Can businesspeople help the relative low uptake of SMS-type text messaging in the United States? Yes, say some experts. Nope, say others.


A recent report from Jupiter Media Metrix recommended that businesses take a closer look at SMS as a cost-effective alternative to other communications such as paging.

"While the market for SMS-based text messaging in the US will remain small, companies should not ignore SMS as a potential channel for connecting with employees and customers," the research firm said in a recent report.

SMS may not be attractive for sending larger amounts of data, but it offers a useful and economical way to send alerts, Jupiter says.

Although pagers like Research in Motion's BlackBerry have become quite popular among businesspeople, the price tag is somewhat higher than typical mobile phones.

"Jupiter advises that business managers consider use of SMS over more costly alternatives such as paging via the Cingular Interactive or Motient networks for field updates," the report said, referring to US carrier Cingular and RIM's BlackBerry.

However, several operators and other industry experts question the value of SMS to the business segment and believe its current usage is limited.

"Today a lot of Short Mail usage is consumer, from what weıve seen in early statistics," says Jason Guesman, director for business marketing for Sprint PCS. "On the business side, it's much more convenient to use e-mail because it's more universal [and] will reach a more broader set of people."

Short Mail is Sprint's text messaging application. It doesn't use the SMS platform, but WAP.

AT&T Wireless, which boasts more than one million text messages a day, doesn't break down users. But spokesman Ritch Blasi believes business users would be more likely to use wireless e-mail than text messaging.

"If you use e-mail, you're able to access corporate accounts, as opposed to just sending text messsages," he says.

Charul Vyas, senior research analyst at International Data Corporation, sees consumers driving SMS usage the next couple of years.

"What little there is [of text messaging] is mainly on the consumer side," she says. "Carriers are mainly focusing their SMS service for consumers rather than business."

Business users are more willing to cough up the extra expense for a larger keypad of the type found on the BlackBerry, she says.

"Business could use [text messaging], but it's more of a challenge, though, to get the workforce to type in messages [on a phone]."

Guesman, from Sprint, agrees.

"For light users of messaging, a phone is your most cost-effective," he says. "But when you [need to start] processing a larger volume, then a BlackBerry comes into play. [Its] keyboard obviously has some advantages."

However, one possible value for business users would be to use SMS for alerts, Vyas says.

One major challenge for consumer usage of SMS is the lack of inter-operability between different operators. However, that may be less of an issue for the enterprise segment since a company typically would only use one carrier for communications between the home office and the field worker.

Also, efforts are under way to deploy technology that can solve the inter-operability problem. In addition to New York-based MobileSpring (see story on text messaging in the united States in TheFeature, April 26, 2001), there are at least three other companies offering solutions that enable carriersı SMS to talk to each other.

Maryland-based TeleCommunication Systems, Inc. offers a Message Distribution Center which enables linkage. California-based MobileWay offers a similar service through its Internetwork and Bellevue, Washington-based-based InfoSpace offers its SMS routing alternative.

TCS boasts such clients as Sweden's room33 for its SMS solution, while InfoSpace already provides SMS services for various European carriers, including Virgin Mobile in the United Kingdom and KPN and Libertel in Holland.

Another important development was last month's launch of AOL Instant Messenger (AIM) through wireless carrier VoiceStream. Sprint PCS had already launched the service and AIM customers can now communicate to each other even if one is a VoiceStream customer and the other uses Sprint.

In the interim, packaged solutions will make deploying SMS extensions to companies much easier, Jupiter argues. Microsoft will make Exchange available through SMS thanks to alliances with several operators, while Xiam provides a router that facilitates updates and replies via SMS, with channels built for a variety of databases, e-mail and HTTP servers, Jupiter says.

Some industry officials and analysts warn against looking at SMS as an isolated application.

"The distinction that carriers draw between e-mail and SMS is an arbitrary one," says Charles Golvin, senior analyst at Forrester Research. "Consumers donıt care if itıs SMS or e-mail. It's still text on their phone."

Usage

According to an estimate by Robin Hearn, a US-based senior analyst at British market researcher Ovum, there are around 15.8 million users of SMS in the United States.

"It's picking up [but still] very much in its infancy, like Western Europe a couple of years ago," he says.

Yankee Group estimates the number of SMS users will grow from 7.7 million last year to 17.7 million in 2005.

According to Yankee, 85 percent of SMS traffic in the United States last year was generated by adults, with the remaining 15 percent generated by users under the age of 19.

That contrasts with Europe, where teenagers have been the driving force.

But the US youth segment will grow rapidly and in 2005 account for 50 percent of all SMS usage in the United States, Yankee predicts.

SMS usage is lagging Europe not only because of inter-operability problems between different operators, but also the fact that U.S. consumers spend less time on public transportation than Europeans, Golvin and Hearn say.

"Americans spend more time in their cars. Few take rail or other forms of transportation where you have your hands free," says Golvin. "So I donıt expect to see the same level of adoption as in Europe. It will grow, but not at that level."

Another key challenge is that U.S. consumers are so used to e-mail through PCs, that their expectations are much higher in terms of the user experience of a phone with a little screen and smaller keypad, says Paul Coster, an analyst at JP Morgan Chase.

Jupiter agrees.

"Consumers' expectations regarding the use of e-mail addresses have been set on the PC and are not likely to cross over to the limited input and display capabilities of most cellular phones," its report said.

Coster believes SMS only has a small window of opportunity in the United States.

"That window will slam shut when you get GPRS," he says.

Rival applications like e-mail or instant messaging become more attractive with the implementation of higher-speed technologies like General Packet Radio Service (planned by operators like AT&T and VoiceStream) and cdma2000 1xRTT (planned by Sprint PCS and Alltel). Sprint plans to launch the technology as early as this year.

Instant messaging

It's also unclear what effect instant messaging will have.

"The wild card for text messaging is instant messaging," says Golvin. "I could see a significant surge in seamless instant messaging across carriers and across messaging devices."

Guesman, from Sprint, agrees.

"Instant messaging is starting to gain attraction in the business segment. It's in the middle between calling and sending an e-mail," he says. "E-mail is less immediate than a call and instant messaging is less intrusive than a call."

Ken Dulaney, an analyst at Gartner Group, believes many SMS and pager users will be drawn to instant messaging and its improved functionality.

"Mobile instant messaging is the evolutionary next generation after two-way SMS and paging, technologies that have poor addressing schemes and are closed systems," he wrote in a report.

However, instant messaging has its own challenge: The typical instant messaging service providers are not compatible with each other, so the service depends on each party using the same service provider. There are currently some 100 million registered users of AOL Instant Messenger, another 100 million registered users of ICQ (also owned by AOL, but operated separately and not compatible with each other) while some 32 million use MSN Messenger. There are likely some users of one or more of these services.

"The ongoing battle between AOL and rival providers of IM infrastructure does little to inspire carriers' confidence," Jupiter points out.

But the firewalls between these systems may disappear at some point. If mobile subscribers broadly adopt the Mobile Data Village initiative of Ericsson, Motorola and Nokia, AOL will feel compelled to open its infrastructure, according to Jupiter.

The research firm estimates that such a scenario is at least three years away.

Others are more optimistic.

"I think you'll see some kind of inter-operability within the next 12 months," Sprint's Guesman says.

In the interim, SMS usage will continue to grow, albeit at slower rates than Europe and Asia.

Joachim Bamrud is an award-winning journalist with 17 years experience as a writer and editor in the United States, Europe and Latin America. Bamrud has worked for various print, broadcast and online media, including Latin Trade, Reuters and UPI. He can be reached at jbamrud@hotmail.com.