Tuesday, June 9, 2015

Global Messaging Market is Flat, in Terms of Revenue

The messaging market, including both carrier text messaging and over the top messaging, will decline from $113.5 billion in 2014 to $112.9 billion in 2019, a decline of $600 million, or less than half of one percent.

Volume growth is not the issue, as messaging traffic is predicted to double by 2019, according to Juniper Research. Most of the growth is driven by over-the-top messaging applications, which will see 300 percent growth in usage.

The number of messages sent will grow from 31 trillion in 2014 to 100 trillion by 2019, globally.

Revenue generated from each OTT message is forecast be less than one percent of revenue generated by text messaging (SMS) in 2019.

None of that will come as a surprise to anybody who follows the messaging market.

Revenue cannibalization is a problem for nearly every business confronting an Internet-based competitor. The phrase “analog dollars, digital dimes, mobile pennies” captures the sense of the dynamic.

So consider the position communications service providers face. The dollars to dimes to pennies dynamic now affects every one of their core revenue streams, fixed or mobile.

And there are other issues. As a Verizon executive said recently, “we are running out of people to sell service to.” In other words, the mobile market, for decades the industry growth driver, is rapidly maturing.

That explains the high interest in Internet of Things. Sheer opportunity explains it. Selling connections to billions of machines will be a crucial revenue substitute as services sold to people stalls or actually begins to go in reverse, in terms of revenue.

It might also be fair to offer a reflection on an old question. Fifteen years ago, one could have gotten a robust argument about the future of networking. Some would have argued the “Internet” was the next generation network.

Others would have argued vociferously against that notion. It might still be possible to draw a distinction between “Internet” apps and services and “carrier” apps and services.

But it would be quite a bit less controversial today to say the Internet represents the future of most networking, apps and services, even if managed services remain important.

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