SMS in the U.S. Market: Why Doesn't It Work Here?
SMS in the U.S. Market: Why Doesn't It Work Here?
By: Dan Lubar
Aug. 22, 2001 12:00 AM
Wireless text messaging (or SMS) is a juggernaut in almost every GSM mobile operator network on the planet. Here's a look at some of the reasons why it hasn't yet caught on in the U.S.
Since the beginning of 1G wireless networks, wireless has always had a hard time living up to the expectations placed on it. (Hey, did you hear the loud gasp from the marketing folks out there? Sorry guys.) Well, today's wireless data products are still part of the status quo.
The continual "reality gap" that marketing builds to help with the adoption of wireless products and services does not, in the end, work in wireless's favor. This reality gap has appeared with the early rollout of 2G, with the rollout of some of the pager networks and, even as I write, with the 3G technologies (and let's not forget WAP as another current shining example of over-hyping wireless). Of course all these technologies will ultimately have value - you'll just have to wait for the market to catch up a bit to the hype.
It's important to note that today's SMS is different though. For SMS, a service that was admittedly somewhat of a by-product of the wireless network itself, there was no real hype and no real expectations at all in the U.S. market and, arguably, in any GSM market.
In fact, you could even call SMS the "paper clip" of the wireless world. SMS is not as "sexy" as all those cool 3G color screen devices seen in so many press kits (being from the U.S., I would ask if those devices are just a Photoshop creation or if they're for real... someday we'll find out), but SMS provides real value to today's customers. Not to mention the revenues it brings in for the mobile operators running GSM networks.
In fact, SMS has generated such popularity that BBC Prime Time ran a TV show this past June in the U.K. called "The Joy of Text," a 45-minute piece that described the ways "texting" touches people's lives. Even ABC news ran a piece on "texting" in mid-July.
Five Reasons Why
1. SMS 'Out of the Box' and Wireless Product Confusion
Sadly, product and brand confusion in the U.S. among wireless carriers tends to be a way of life. U.S. carriers need to get their marketing act together. If you recall, U.S. mobile services consumers have always been perplexed by all the voice product and service offerings. What will be in store for the wireless messaging consumer in the U.S. market when two-way messaging products really make their way to the front of the stage? It's shaping up that history will repeat itself. If each carrier calls their two-way product by a different name, and their messaging product offerings by another name, you get the picture. If just a few U.S. carriers could co-brand a name for SMS one-way and two-way messaging products, it would streamline the marketing efforts and could have a large impact on cutting through the confusion that seems to be inevitable.
2. The 'Walled Gardens' and the Voice-centric Ways of U.S. Carriers
It's also true that for most U.S. carriers, voice is a "known quantity" that generates a steady revenue stream - stick with what you know right? This kind of thinking doesn't tend to allow a large push into SMS products and services. It's like Hollywood moviemaking. Hollywood will go after a known quantity over an unknown one. Getting funding for another Kevin Spacy movie will be easier than funding a film with an unknown actor.
3. GSM vs Non-GSM
That makes the U.S. market very much in the minority. Why does this matter? Here's a hypothetical situation for you. If you had a software or service that would enable the use of SMS messaging at a carrier level, where would you put most of your efforts? It's likely you'd go after the larger economies of scale where the lion's share of the messaging market exists - GSM. Then you'd worry about creating carrier-grade solutions for the smaller markets, such as the U.S. Now I'm not pointing fingers here, I'm just stating a business case that seems to make sense.
4. Population Density
5. The 'Regionality' Factor
To help describe the unique characteristics of each market, it's useful to coin a word that describes how a given wireless service may, or may not, enjoy successful adoption. The word regionality might be defined as the effect that a number of cultural, technological, or economic factors can have on whether a given wireless product or service will make it in a given market or region. We'll talk more about regionality in future articles.
How does all this affect SMS adoption in the U.S.? It has to do with the U.S. Internet regionality factor. (How many people have easy access to the Internet in the U.S. market and what effect does that have on SMS?) According to research done by the Alpha Group, more than 60-million households in the U.S. have access to the Internet via PCs, and more than 90-million people have wireless phones. Which do you prefer if you have easy access to the Internet? Read an e-mail or instant message on your computer, or get a wireless text message on your phone? The Internet factor in the U.S. creates a regionality effect that shows that the U.S. might not be as motivated to adopt SMS early on because of the wide adoption of Internet-based messaging tools such as e-mail - which is sometimes hard to come by in other parts of the world.
Since there are many significant differences in the U.S. markets as opposed to those of the many GSM networks out there, the U.S. market will need to find its own way. For instance, it seems likely that instant or unified messaging will play a role in the U.S. wireless messaging market that it might not elsewhere.
Of course, no matter what happens, it's up to the U.S. wireless carriers to promote and nurture wireless messaging services. By doing so, they hold the key to creating value for their customer base. For motivation, they need only to look at any GSM operator network to get a glimpse of what wireless messaging could be in the U.S.
Are there other reasons for SMS not working in the U.S.? Let me know at email@example.com.
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