3 reasons why iMessage won’t kill SMS

We’ve seen some eye-catching headlines in response to to Apple’s new iMessage, which enables iOS 5 users to send unlimited texts and other content to fellow users without incurring carrier charges. The biggest noise surrounding the service is that bloggers and industry insiders claim that SMS revenues “are going away” because iMessage “makes texting obsolete” and — for good measure — that “Apple has finally stuck a dagger into SMS.”
Don’t believe the hype. Let me be clear: I’d like to see SMS snuffed out, too, given the outrageous prices that carriers charge for transmissions that barely impact the network. (One blogger determined in a 2008 analysis that carriers charge roughly one cent for every byte of data in an SMS message when charged per message. At that rate, downloading a song would cost about $6,000.) And it appears there’s a lot to like about iMessage, from its integration with SMS (so messages are sent through the platform automatically and marked as such in the user interface) to the fact that it gives iPad and iPod touch owners another way of communicating on their devices. But iMessage won’t impact SMS usage and revenues much more than BlackBerry Messenger (which boasts 35 million users) has. With that in mind, let’s examine a few reasons why iMessage isn’t about to ring the death knell for SMS.

1. It works only on iOS devices. Yes, there are more than 200 million iOS gadgets in use, but Apple’s mobile operating system accounts for a little less than one-fourth of the overall U.S. smartphone market, according to new data from ComScore. Smartphones are still outnumbered by feature phones in the U.S., so Apple’s share of the overall handset market is much smaller. And while smartphone users consume far more mobile data than their feature phone–toting counterparts, nearly everybody sends text messages.
2. SMS is typically bundled. Service operators sell text messages to consumers in bulk or package them with voice services, so it’s highly unlikely that users who text often are paying 20 cents or so per message they send or receive. There are a few scenarios where iMessage could replace SMS — families or small businesses where everyone carries an iOS device, for example — but those cases are not as common. The vast majority of users will be highly unlikely to change their messaging plans.
3. Carriers can tweak their SMS plans accordingly. As Sascha Segan at PCMag.com noted, carriers control the networks. So they could identify iMessage missives and count them as SMS if they choose to, or they could simply raise overall data charges for all users to offset any lost revenues.

For more thoughts on why iMessage doesn’t pose a mortal threat to the cash cow that is SMS, please see my weekly column at GigaOM Pro (subscription required).