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Global Economics

Asia Leads Global SMS Growth

Research house Gartner estimates the Asia-Pacific region, including Japan, will lead mobile-messaging growth in 2008, with 1.7 trillion messages sent

The analyst house estimates the 1.5 trillion messages sent by the region's subscribers this year will grow to 1.7 trillion in 2008, making up the bulk of messages measured across "major markets worldwide" including North America and Western Europe.

North America is expected to send 189 billion messages by the end of 2007, a number that is forecast to reach 301 billion in 2008. Western Europe will send a total of 202 billion mobile messages by end-2007, and is projected to send 215 billion next year, according to the Gartner figures.

Overall, the analyst's findings put the volume of messages sent this year—across major markets—at 1.9 trillion. This number is expected to go up by 19.6 percent to 2.3 trillion in 2008, Garter said.

The research firm noted that this anticipated growth will spell a bump of 15.7 percent in mobile messaging revenue worldwide, from US$52 billion this year to US$60.2 billion in 2008.

However, Gartner warned that operator margins from messaging services will continue to thin due to strong competition and market saturation.

Nick Ingelbrecht, research director at Gartner, said in a statement: "In many markets, there has been strong pressure on operator margins for text messaging services and this has been driven by often intense competition between carriers."

According to Ingelbrecht, users have grown accustomed to carrier plans which bundle SMS (short message service) into their cellular service packages. As a result, carriers should aim for customer acquisition and retention through various measures. For example, he said, operators should continue to develop their messaging platforms, services portfolios and pricing plans, rather than simply conducting "short-term margin enhancements".

In developed markets across the Asia-Pacific region where mobile saturation is inhibiting growth of subscriber numbers, social networking applications such as mobile IM (instant messaging) and e-mail are expected to help drive revenues.

Ingelbrecht said: "To sustain growth over the next few years, carriers should look to work with popular established social networking sites."

However, in spite of the SMS revenue mobile search services and advertising can potentially yield, the Gartner analyst said "most carriers appear poorly placed to support the end-to-end campaign management and reporting requirements of media buyers and advertisers".

In addition, basic SMS may pose a greater value proposition for emerging markets. According to Gartner research analyst Stephanie Pittet, SMS may spur mobile revenues in these markets, where the people have low buying power, due to the cheaper price of SMS compared to voice calls.

According to a separate study published by Frost & Sullivan in March this year, the Asia-Pacific mobile subscriber base is also expected to be fueled by emerging markets adopting the messaging service.

Provided by ZDNet Asia—Where Technology Means Business

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