Will Apple Inc (AAPL), Facebook Inc (FB) Kill The Text Message?

Apple Inc (NADSAQ:AAPL) introduced iMessaging with its iOS 5 platform last year, and in the time since, the software – and other services like it – have taken a bite out of the SMS text message market. According to well-respected mobile analyst Chetan Sharma, who reported the data on his personal website earlier today, text messaging activity in the U.S. had declined for the first time in history, from an average of 696 texts per month in Q2 to 678 in the most recent quarter. Revenue was also down slightly in the third quarter.

Apple Inc. (NASDAQ:AAPL)

While he didn’t name names, it can be surmised that services from the likes of Facebook Inc (NASDAQ:FB) and Apple Inc (NASDAQ:AAPL) have played a role into cutting down texting activity, as cellular subscribers now have a variety of data-driven alternatives to the traditional SMS message. Sharma notes that the U.S. is actually late to the party when it comes to text message decline, but does not give any specifics on why this may be the case.

Logically speaking, our guess is one of two reasons: (1) American consumers were able to initially increase their capacity for different types of messaging services more easily than their peers, or (2) the U.S., which has the most mobile phones in the Western Hemisphere, simply has less need for SMS alternatives than other countries do. Either way, Sharma puts it best when he states that:

It might be early to say if the decline has begun or the market segment will sputter along before the decline takes place [...] once the market segment reaches the 70-90% penetration mark, the decline begins and we might be seeing the start of the decline in messaging revenue. The decline is primarily due to the rise in IP messaging and operators have been slow to evolve their strategies in the segment.

Despite the increased pressure from Apple Inc (NASDAQ:AAPL) iMessage and Facebook (NASDAQ:FB) Messenger, the New York Times so aptly pointed out that Sharma’s report did hint that telecom-focused investors shouldn’t worry over “the seemingly imminent decline of text messaging, which is highly lucrative for carriers,” as major players like “AT&T and Verizon Wireless are still posting healthy profits, largely because of revenue from mobile data plans, the fees people pay to use the Internet over their networks.”

Moreover, the market’s top trio, which includes AT&T Inc. (NYSE:T)Verizon Communications Inc. (NYSE:VZ), and Sprint Nextel Corporation (NYSE:S) receives close to half its revenues from the consumption of mobile data, so fear of a text message demise may be a moot point. After all, for for the smartphone-using crowd in its entirety, Apple Inc (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB)’s services can offer a cheaper way to send messages depending on the data plan one is subscribed to. While IP messengers have been around for quite some time, it’s their implementation into mobile applications that have truly changed the telecom landscape; this is a fact that Apple and Facebook fanboys surely won’t let die easily.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Top Reasons For Getting Fired

The 3 Best States to Start an LLC

10 Jobs That Allow You to Travel

7 High-Paying Jobs You Can Do From Home

12 Best Cities to Shop in USA

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!