Crystal ball gazing – the future for the SMS industry

Topic: Esendex news
The demand for mobile and wireless services continues to grow – despite the talk of looming recession. However, as our industry matures and the world economy shifts, so businesses like ours need to continue to change and adapt to the changing environment. 

Prediction No. 1 – The Premium Rate SMS market will get tougher – and cleaner!

The Premium Rate SMS regulator, PhonePayPlus, is becoming increasingly vigilant. Perhaps stung by Ofcom’s recent investigations into TV services (typically based around Premium Rate telephony rather than SMS) and the continued abuse of some services, they are taking a far stronger stance. It’s been reported that they have already issued almost as much in fines this year as they did in the whole of last year.
We’re a tier 1 Premium Rate SMS provider but the content-driven markets aren’t really core to Esendex and so we’re not really directly affected. The few large players that dominate these markets will adjust their strategies accordingly and new and existing applications will continue to flourish. However, those companies on the fringe of the industry may find 2008 a tougher environment.
The less ethical providers will finally need to clean up their act. I also anticipate that smaller, 2nd or 3rd tier providers, i.e. those not directly connected to the Mobile Network Operators will struggle against the bigger players.

Prediction No. 2 – The SMS industry will start to consolidate

Depending on who you talk to you’ll hear that SMS services have been around for 5, 8 or even 10 or more years. Our view is that a proper industry started to crystallise around 2002.
Historically it’s been relatively straightforward to start offering online SMS services but customers have become increasingly informed and educated about what they expect from an SMS provider – about the need for multiple network connections, global reach, proper levels of service, and the inevitable trade off for a very low price against a successful delivery rate.
Now, unless you have a certain level of critical mass, it’s becoming harder and harder to meet customer’s expectations.
As the global credit crunch filters down to the real world outside the City and financing, overdrafts and bank loans become harder to come by, so smaller players will struggle.
There are already rumours about a couple of SMS businesses and whether or not these are true, it’s inevitable that we’ll see some smaller providers “consolidate” this year, hopefully on their terms rather than as a fire-sale.

Prediction No. 3 – Despite consolidation we will also see specialisation

Whilst the core SMS market will consolidate, I also believe we’ll see SMS becoming an even more integral part of normal business communications. Almost every piece of business software includes an email facility, from Sage to Salesforce to the most specialised of niche market solution. But typically they provide an interface to your established email service.
The same is starting to happen with SMS. For several years we’ve seen more and more software providers integrating our services with theirs and whilst in the past they may have “white-labelled” the service, increasingly they recognise that they need to work with an SMS specialist – and that to declare this actually strengthens rather than weakens their proposition.
With software providers focussing on the messaging requirements of the end-user and SMS specialists focusing on sending and receiving messages, everybody wins!

To summarise:

I don’t know how accurate my predictions are – there are certainly a number of factors that are almost entirely outside the SMS industry’s control: economic activity, regulatory control etc.  There are also many things that we can do – continue to innovate, deliver high service, and good value.
There’ll be both winners and losers in the months to come but end-users will almost certainly get a better deal