Over the last year we have seen a sharp decline in SMS, especially in the countries that are seeing a rapid penetration of smartphones.

There has, however, been an increase in the use of SMS by older people (30+) and this is compensating for some of the decline in the youth market (under 20). This clearly shows that there most certainly is a viable market for the service, but, with all the new communications options that are available, we believe a ‘horses for courses’ approach will be taken to these services.

This will not need to be taught or promoted – people will make their own decisions as to what means of communication they use.

A rebalancing is taking place along the lines that BuddeComm has been predicting for several years. In the past the younger demographic has been over-represented in the SMS market. Of course, it is still the youth market that drives SMS volumes, but our youngsters now have many other options. Facebook has most probably been the major factor in the decline of SMS, as this is now the preferred way of communication for that generation. Smartphone apps that offer free SMS are other popular alternatives, and these applications are also gaining momentum among the older demographics.

These developments will lead to a further deterioration of the SMS market, and this will continue for at least another 3-5 years. As a result more and more apps are going to have an embedded comms feature. Apple will soon dominate most of the messaging that is taking place over its hardware – it is working on some very interesting applications. And Google (Android) will not be far behind.

Various means of communications are increasingly being used to get people into certain applications and it is within these apps that future revenues will be generated. Communication services will be given free of charge, as an incentive, and comms will slowly splinter away in many apps on smartphones and internet sites – threatening not only SMS, but traditional voice services also.