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Why social networks won?t cannibalize SMS

By William Dudley

Over the past year, there has been speculation in the press and from various industry and financial analysts that today?s popular social networks could begin to cannibalize SMS traffic and, ultimately, revenues.

The real fact is that SMS and messaging revenues and social networks can and do actually complement each other.

Unfortunately, Internet-based sites ? whether they are shopping, news, commentary, blogs and now Web 2.0 phenomena social networking sites such as Facebook, MySpace and Twitter ? have all come under constant attack by various means.

Twitter was recently brought down for much of the day by a massive Denial-of-Service attack. Facebook was also significantly slowed.

While mobile messaging is certainly not immune to spam and malware attacks, the ecosystem has been built to where these are minimized and easily defeated.

Atwitter about SMS
According to comScore, Twitter reached 44.5 million people in June. The numbers vary as to how many are active tweeters. Facebook reports 250 million active users, with 120 million logging on each day.

While these sites do attract a lot of people, those statistics are still overwhelmingly dwarfed by those of SMS ? a reach of more than 3.6 billion subscribers.

Of those 3.6 billion subscribers around the world, more than 90 percent are in major markets with at least 60 percent to almost 90 percent of the subscribers noted as ?active subscribers? ? meaning that they initiate at least one or more messages per month.

Furthermore, bundled with mobile versions, mobile-specific applications and mobile messaging, the mobile device as an access portal for social networking is robust and likely to grow.

Mobile messaging traffic volumes today are still 90 percent person-to-person (P2P). In fact, it is now the most prevalent non-verbal communications medium in the history of mankind.

Virtually all of the handsets made today support at least SMS as an integral component. Conversely, Twitter is not a replacement for SMS, but essentially a micro-blog ? a way for people to get some idea or concept across to a community of ?followers? in 140 characters or less.

It is interesting to note that within that 140 characters is, many times, a URL to link to some more detailed content.

Tweet sheet
Twitter certainly has its place and is a very useful concept for many reasons. But it is not designed for two-way, private communications such as an SMS conversation, although it does have this capability for users to send private messages, but I think that is somewhat of an add-on ? it is not Twitter?s primary purpose.

Another key reason why Twitter, Facebook and email will not displace SMS is that all of these mediums open up the user to significant spam.

There is already a sub-industry of Twitter and Facebook spammers, and another sub-industry to try to stop them.

The SMS and mobile messaging ecosystem is at a much lower risk for a significant spam problem.

In fact, McAfee, in its second-quarter 2009 Threats Report reported, ?Spam as a percent of total mail also set a record this quarter. We estimate its prevalence at 92 percent; this ?outperforms? the 91 percent we recorded in the second and third quarters last year.?

Regarding Twitter, Facebook and other Web 2.0 sites, McAfee writes:

?There are some distinct security risks that social networking sites present. Many of the risks have to do with the large number of features and applications that so many people run without a second thought.

?This carefree attitude has allowed various worms, phishing attacks, and other such malicious activity to come into play.

?For instance, there are many social networking tools that will do all sorts of things for users ? from monitoring bank accounts to blocking and hiding from others.

?The key is that many of these ?tools? require users to enter usernames and passwords. It?s unfortunate that many people feel so at home with the interactive Web 2.0 experience that they forget the basics of online security.

?Once attackers gain access to account credentials, they have full access to the victims? friends and can launch all sorts of mischief. This phenomenon gives new meaning to the term ?friendly fire?.?

The messaging ecosystem is, for the most part, a closed ecosystem.

Start with mobile devices tethered to networks, using difficult-to-monitor, encrypted digital radio protocols with various filters and security elements built along the way, to networks of operators and hubs, all providing various security and filters.

The main vulnerability is from the wireless carriers themselves ? too much open access to the SS7 cloud or open SMTP email gateways. But many of these vulnerabilities are closing and are difficult to exploit.

Web 2.0 and text complement
Web 2.0 sites are important, useful and rapidly growing in popularity and richness ? but as a phenomenon that will ultimately cannibalize messaging? No, not likely.

In fact, we argue that Web 2.0 and mobile messaging actually draw strength from each other.

Mobile messaging remains an immensely popular medium ? still growing in many markets, and in markets where it has peaked due to saturation, it remains steady.

Web 2.0 and SMS or mobile messaging is actually more complementary in that SMS can provide the means for individuals to continue conversations in a more personable manner.

In many ways, the mobile device and messaging actually extend the Web 2.0 interactions to the mobile device, whether through alerts or as a medium for transporting that conversation.

One could argue that SMS is much more personal than the more collaborative Web 2.0 applications in that it is typically a one-on-one or private conversation.

As with many threats to the overall revenues that mobile messaging has brought to the industry and economy in general, this one is really misdirected in that many people fail to understand that the purposes for Web 2.0 can really add to messaging revenues.

On the other hand, the biggest threat to the revenue that mobile messaging provides has more to do with the dilution of these revenues as a percentage of data average revenue per user than cannibalization by another medium.

As the industry moves toward a more IP and broadband centric ecosystem, and rather rapidly at that, we should see the messaging share of the revenues shrink as its contribution is slowly diluted by more and more IP services.

William Dudley is group director of product management at Sybase 365, Reston, VA. Reach him at .