SMS bigger than movies, video and software

Via Open Gardens, some statistics about SMS revenues. Really makes you stop and think, eh?

Total SMS revenues in 2005 were about 75 Billion USD. To put it in context, Hollywood box office is a bit below 30 B USD. Global music industry revenues are about 35B. Videogaming, consoles and all software are about 40. And the total value of all laptop computers sold in 2005 was about 65 B USD. SMS alone earns more than any of those industries.... And SMS is still over 90% profit. Do we love this industry or what?

Comments

[Scott Moore]

This rumor is spreading fast, but I was unable to access the original forum where this was said to see if anyone is backing up or picking apart the numbers quoted here.

According to Portio Research's Mobile Messaging Futures 2005-2010, "mobile messaging has become an immense global industry generating over $55 Billion USD in 2005, the largest portion of this revenue comes from simple SMS, worth an estimated $35 Billion USD in 2005."
http://www.portioresearch.com/MMF05-10.html

If you come across validation (or refutation) of the $70B number, please post it for the benefit of us all. My "too good to be true" sensors are beeping loudly. I'd love to be wrong.

[Amy Jo Kim]

Thanks for the heads-up, Scott - I'll check it out.

[Tomi T Ahonen]

Hi Scott and others.

The stat was first published by me and was generated by my 3G/mobile telecoms consulting company, TomiAhonen Consulting.

You might know me from my four bestselling books on mobile and my courses at Oxford University. The Portio Research study you mention is slightly out of date, as SMS went past 50 B back in 2004. Since then we've seen global mobile phone user numbers grow beyond expectation (hit 2.1B end of 2005), global SMS user numbers keep growing (hit 1.3B users in 2005 - which is twice the total number of e-mail users of 668 M by the way, and even more than the total number of e-mail mailboxes of 1.2B which obviously means that on average we maintain two mailboxes each), the usage of SMS keeps growing worldwide, leading European countries approaching 3 SMS per day per phone user (at penetration rates of over 100% per capita), and world leaders Philippines and Singapore at about 15 SMS per day per phone user, the predicted price erosion of SMS was less in 2005, and the growth of premium-SMS has been significantly greater than expected mostly due to SMS-voting and SMS-to-TV chat (where several youth oriented cable TV/music/gaming channels report 75% of their total revenues coming from premium SMS). Add all of these together, you are at 75 B USD for 2005.

In fact I believe the 75 B is slightly conservative.

At the moment we don't have any other sources reporting this number which is typical of my early-warning forecasts for latest numbers that I regularly provide for the industry, and which tend to be widely reported.

I am 100% confident you will find the major mobile experts coming with numbers very close to my prediction. I am that close to the numbers, and my track record for short-term forecasts is remarkably accurate (saerch the web and check out what I said in April 2005 about mobile phone penetrations for 2005 when most experts said said it would hit 1.7B or 1.8B USD at the end of the year. I said 2 B would arrive in September and I nailed that forecast.) And yes, my second book m-Profits is still the only business book for mobile telecoms (where I predicted global mobile phone penetrations in advanced markets would hit 120%, a radical prediction in 2002, and today Hong Kong and Taiwan are there, Italy and Israel are a few percentage points below 120 and 30 countries report per capita phone penetrations over 100%.)

I am regularly quoted in the telecoms and business press about telecoms stats and forecasts, ranging from Business Week and Financial Times on to the specialists like 3G Mobile and Mobile Communications.

But for a reality check on the 75 B USD number. The world total of mobile telecoms service revenues in 2005 are in the range of 570B to 624B depending on which source you use. The SMS figure of 75B works out between 12%-13% of total reveues (and of ARPU), which is very much in line, and actually slightly conservative as SMS's proportion as Western European operators report SMS as between 15%-20% of revenues, leading countries like the Philippines over 30%, and many emerging market economies report extremely heavy SMS usage for price differential reasons (ie poor people cannot afford voice calls in India, etc). Even Americans are finally getting into it, in 2005 already a third of all American mobile phone owners (and thus a quarter of the population) got into sending SMS text messages. In the youth segment the usage is over 75% in America. These numbers - like just about all mobile phone stats for the USA - lag Western European numbers by about 2-3 years, and the world leaders like Finland, Sweden, Japan, Korea, Hong Kong and Italy - by about 5 years.

So as a "reality check" the 12%-13% proportion is also most reasonable.

Probably the big surprise with many analyzing SMS performance is because they think IM Instant Messaging and e-mail for mobile, like the Blackberry. You really need to understand that SMS is a SUPERIOR method on two levels. It is the fastest method to communicate, when measuring through-put, which is why business execs use it overwhelmingly for urgent messages such as schedule changes. And more importantly, and less easy to understand, is that SMS is a separate, "clandestine" method of connecting with peers, sharing an inside joke, etc. As British CEO of the university student broadcaster SubTV, Peter Miles, says, the youth are the Borg. They can be in a room full of young people, and still find reason to send SMS text messages to their besf friends IN THE SAME ROOM. Not because it is too loud. But to be "conspirational" or cheeky, irreverent, or just to pass on a secret note. SMS is addictive, as more and more people in the world catch the bug - remember twice as many people send SMS messages as use e-mail - the more there will be total traffic.

You might enjoy a couple of blogs I've written about this recently, at my blogsite www.communities-dominate.blogs.com - check out my blog this week entitled "The ARE the Borg" which was also selected into this week's Carnival of the Mobilists.

Oh, and about the 75B USD number and Forum Oxford's reaction - we do have over 650 members at Forum Oxford, a dozen authors in mobile and most of the big bloggers (if you look at the Carnival of the Mobilists, most of those are also members of Forum Oxford) etc. I've posted that specific statistic (SMS at 75B USD worldwide in 2005) into two threads, my own first posting launching the topic of "Americans finally use SMS at European levels" of 3 March 2006, and as a response to Ajit Jaokar's thread "The great DMB vs DVB-H debate" on 26 February 2006.

Neither attracted a dissention of the statistic.

But don't take my word for it - join us at Forum Oxford, it is a free discussion board on the future of mobile. If you are not a student of Oxford University, the system will ask for an "enrollemnt key" and for that you can use the word "forumoxford". It will only be asked once, and after that you are forever enrolled to Forum Oxford. Welcome ! our site is located at www.forumoxford.com and yes, it is fully sponsored by Oxford University, and this discussion board is free and will be free always. So you can also safely invite your friends. In fact its a pretty impressive line to add to your CV as well, being a member of Forum Oxford's Next Generation Mobile Applications Panel.

Welcome

I trust the above has helped you see the thinking behind the SMS numbers. I am very confident that as we get other big mobile analysts, the Ovums, Gartners, EMCs and Informas etc reporting on SMS for 2005, they will be hitting very close to the 75B number.

Tomi T Ahonen
four-time bestselling author and consultant on mobile
founding member Forum Oxford, Carnival of the Mobilists and the Engagement Alliance
blogsite www.communities-dominate.blogs.com
website www.tomiahonen.com
Tomi T Ahonen lectures regularly at Oxford University's courses on 3G technology, business and marketing

[John White]

Hi all,

Interesting discussion about the true global value of SMS, and I see some doubt about the SMS data we produced in our 2005 market report "Mobile Messaging Futures 2005-2010". If any of you reading this would like a FREE copy of that report so that you can read it and make your own assessment, please email me and just ask.

Thanks and kind regards, John White.
Director, Portio Research Ltd, UK.
www.portioresearch.com

[Hubert Silly]

Hi yes John, I'd like to get a copy of that report, I have a real tough time imaging that this is true and I don't want to be left out of something this big if true!

Thanks for passing on the info.

Thanks,
Hubert

[SMS]

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