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.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

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!