SMS and MMS Applications: Media With a Message.

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Author: Vittore, Vince

After a torrid launch in Europe, followed by a tepid start in the U.S., SMS appears to have finally gone mainstream, particularly with consumers in the 18- to 34-year-old demographic. Those hoping that MMS will follow the same adoption curve may be disappointed.

According to data from M:Metrics, about 37% of U.S. mobile phone subscribers used text messaging in the past month and 45% are likely to use SMS in the next year. However, the numbers drop fairly rapidly for MMS because of a number of factors, particularly interoperability, said Mark Donovan, vice president and senior analyst for M:Metrics. At the same time, as SMS has achieved near-mass-market status because of its interoperability, carriers' brands are quickly fading as a differentiator.

"That's the tradeoff for networks technologies," Donovan said. "Part of the reason you don't see strong carrier skews is that it's a technology that after many years, interoperability finally has been achieved. From a consumer point of view, when things are interoperable, it just means they work. That opens the door to mainstream acceptance."

At the same time, many consumers tend to view text messaging as squarely in the domain of communications, while most users still see MMS as something of a cutting-edge service. There's also the issue of handset choices, Donovan said.

"Every kid that gets their first phone is going to be an SMS user," he said, noting that only about one-fifth of all handsets currently in users' hands are equipped with a camera.

In some ways, though, the lack of MMS interoperability plays into the hands of carriers that want to offer branded service, Donovan said. In addition, as MMS is rolled out, it is being adopted along a slightly different demographic line than SMS with young males more likely to use MMS than females.

"One of the things that's fairly striking with SMS is you don't see really strong gender skews, and you don't see carrier skews," he said. "SMS is clearly the one that is the most mainstream. You do see some of those skews when it comes to MMS."

As MMS becomes more interoperable--and users become more comfortable with picture messaging and the like--the market is expected to ramp up quickly, according to John White, business development director at U.K. analyst firm Portio Research. In a recent report, the company predicted that overall messaging revenue would hit $50 billion by 2010 with 2.38 trillion message sent. In the U.S., the company is expecting mobile instant messaging to surpass SMS in both revenue and messages by 2009 or 2010.

"MMS is set to grow everywhere, though never reaching the kind of volumes SMS has reached," he said, "But as a premium service. MMS should generate substantial revenues in the next few years."

Helping SMS maintain its status as the most popular messaging form will be a slew of information retrieval services that already have started taking hold in Europe and will migrate to the U.S. Web portals such as Yahoo and Google already have started to take advantage of their vast area of data to create retrieval services. In addition, text voting is quickly becoming mainstream. According to the M:Metrics study, 11.7% of all users have participated in a TV/radio poll in the previous month with a slightly higher male skew.

"When you think about the great work that AT&T and Mobius did with 'American Idol,' they're very educative," Donovan said. "There the only resistance is whether people really want to pay the money for the text message."

The ancillary applications with MMS haven't quite taken hold just yet, he added.

"In the near term, I see the [SMS and MMS] trends as complementary," Donovan said. "MMS has a broad set of things you can do with it. What we're predominantly seeing it used for is sending pictures. With regard to text messaging, we're not going to see anything but an increase."

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By Vince Vittore