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October 11, 2012

Operators to lose $54bn by 2016 from smartphone messaging app popularity

Figures released suggest that social messaging services, such as WhatsApp and iMessage, are taking away billions from operators.

By Tineka Smith

The study, released by Ovum, says that operators are expected to lose $23bn to mobile messaging apps this year alone.

Analysts say that the increasing use of social messaging services on smartphones means that operators will need to collaborate with hand set manufactures if they want to remain competitive and relevant in the messaging industry.

"Social messaging is becoming more pervasive, and operators are coming under increased pressure to drive revenues from the messaging component of their communications businesses," said Neha Dharia, consumer telecoms analyst at Ovum. "Operators need to understand the impact of social messaging apps on consumer behaviour, both in terms of changing communication patterns and the impact on SMS revenues, and offer services to suit."

Ovum analysts say that social messaging is changing the patterns of communications and is here to stay.

WhatsApp, one of the most popular social messaging apps has increased its levels of penetration in the Netherlands and Singapore.

Analysts predict that the penetration of mobile messaging apps will continue to grow with newer and smaller messaging app providers entering the market.

"In the last few years we’ve seen free messaging services appear, such as iMessage, WhatsApp and BlackBerry Messenger, which are adding more pressure to mobile networks and taking away revenues previously generated through traditional text messages," said Tony Kalcina, founder and industry evangelist at Clarity. "These developments are set to increase. According to the GSM Association, by the end of this decade there could be around 12 billion connect devices globally, whilst global data traffic is rapidly increasing – in 2011 we saw it more than double for the fourth year in a row."

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Some analysts say operators need to increase their market presence by offering social messaging services themselves or partnering with content providers.

"Some of the answer to this reinvention lies in monetising mobile content and services, or partnering with existing content providers to share revenue," said Kalcina. "But this isn’t the whole answer. Operators also need to look at how they can use operational support systems to reduce operational expenditure and improve the customer experience and their profitability."

Please follow this author on Twitter @Tineka_S or comment below.

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