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Novel ideas to boost China's
sagging SMS
BEIJING - In
2002, about 90 billion short messages were sent
via mobile phones in China. That number jumped to
217.7 billion last year, according to the Ministry
of Information Industry (MII). But given the spurt
in SMS volumes a few years back, the segment may
have actually experienced a slowdown in 2004.
At the launch ceremony of a joint SMS
business center last month, deputy general manager
of China Mobile Communications Corp Lu Xiangdong
said, "217.7 billion is an astronomical number.
Frankly speaking, our initial idea was just to
replace the beeper with the mobile phone." Among
China Mobile's more than 200 million cellular
users, 75% send an average of more than 100 SMS
messages every month.
But the growth of
SMS, short message service, in the country is now
losing momentum, with an even greater slowdown
expected in the years to come, according to
analysts. That is pushing operators and mobile
service providers to find ways to spur SMS growth
and search for other profit engines. The number of
SMS messages sent in China last year grew 58.8%
year-on-year, said the MII, but it did not give a
comparable figure for 2003.
Based on the
earlier statistics not fully confirmed by the MII,
the number of SMS messages sent in 2003 stood at
220 billion. If this is so, it represents a fall
in SMS growth. The number of SMS messages sent
last year largely fell short of many research
houses' forecasts as well. Beijing-based Analysts
International had predicted the number of SMS
messages would hit 300 billion. The Chinese
Academy of Telecommunications Research under the
MII was even more bullish - the academy had
forecast the number could more than double to 550
billion in 2004.
In addition to those
messages sent via the limited mobility PHS
(personal handyphone system) networks, the total
number of SMS messages in 2006 was forecast to hit
1.4 trillion. But such forecasts now seem overly
optimistic. "I believe the SMS market will
experience very flat growth this year," said Wang
Yuquan, president of consulting firm
Frost&Sullivan (China). However, "SMS has
become a major communications tool for the Chinese
people, and SMS will remain a major profit engine
for wireless value-added service operators," Wang
said.
A recent survey by research firm
www.chinasurvey.com.cn found that 61% of mobile
phone users will send greetings via SMS to their
relatives and friends during the upcoming Lunar
New Year. During the week-long holiday in previous
years, more than 10 billion SMS messages were sent
in China. According to Shanghai-based iResearch,
China's wireless value-added service providers are
projected to post a revenue of 64 billion yuan
(US$7.73 billion) in 2006, up from last year's
38.5 billion yuan.
Wang attributed last
year's sluggish SMS growth to a broad crackdown on
irregularities by the government and mobile
operators. Wireless value-added service providers
including Nasdaq-listed Sina Corp, Sohu.com and
NetEase.com have been involved in irregular
practices such as illicit marketing and offering
pornographic content prohibited by the government.
Some analysts estimated that among the nearly 220
billion SMS messages sent in 2003, about 20
billion were spam.
A crackdown will
benefit the long-term development of the SMS
market, they said. Wang said that a slow growth is
expected in the SMS market in the years to come as
it is becoming increasingly mature. "The growth of
SMS is apparently slower compared to two years
ago," said Cai Ji, deputy general manager of China
United Communications Corp's value-added service
division. "We are wondering how long sustained
growth will last? Are there any new growth
engines? Will SMS be replaced by another service?"
Some analysts believe the continuing fall in voice
communications fees in China are also tarnishing
SMS's attraction.
New
engines
Despite the expected slowdown in
growth, SMS will not be replaced in the short term
by other services as the largest revenue generator
in the wireless value-added service market, said
Xu Yu, a researcher with the Chinese Academy of
Telecommunications Research. The SMS market
continues to offer much potential while service
operators need to make more efforts to tap into
customers' needs, the researcher said.
"Besides chatting, making friends, news
alerts and information inquiries via SMS, the
personalized services targeting different user
groups must have a new direction," she said. Both
Lu and Wang said the so-called "SMS novels" might
be a big hit in the SMS market. The service
enables mobile phone users to read a novel by
receiving an "episode" in a SMS message every day,
costing about 0.3 yuan (3.6 US cents) each. That
may sound crazy in other countries. But the
service is catching on in China. Lu attributed the
craze to China's unique cultural background.
The success of SMS, for example, is
largely a result of it low cost and the general
shyness of the Chinese compared to Westerners. "A
lot of writers have already started working on
'SMS novels', which are gaining increasing
popularity," Lu said. Wang said if mobile phone
users can select plots and endings, or even
participate in writing the novels, the SMS market
will receive an additional boost.
Corporate space
Operators and
service providers can also profit from the
information services based on SMS provided by
insurers, security firms, banks, airlines, and
shopping malls, Wang noted. But companies have an
even longer-term goal in marketing SMS in the
corporate sphere. The joint SMS center, called
MOBNIC (Mobile Network Information Center),
jointly launched on January 18 by China Mobile,
China Unicom, the China Mobile Communication
Association and other service providers, would
enable users to visit corporations' "SMS-based
websites".
Users can send a specific
number, or code, via an SMS message to access the
"SMS website" of a business in order to enjoy
interactive information services. For example, if
a reader wants some information such as the
circulation of a newspaper, he can send the name
of the newspaper or a code to MOBNIC. The reader
will then receive an automatic response that
offers multiple choices to access classified
information, such as circulation. The reader can
choose to get the information he wants, which will
be displayed on the mobile phone's screen.
Organizers of the SMS center said it will
offer businesses, especially small and
medium-sized enterprises with tight budgets, the
chance to market their services to customers. A
number of companies have reportedly started
registering the domains of their "SMS websites",
which could be their "addresses" in the mobile
Internet. China Unicom officials even billed the
launch of the center as a revolution in mobile
Internet.
Jiang Lintao, chief engineer at
the Chinese Academy of Telecommunications
Research, forecast the number of registered SMS
websites will exceed 1 million within three years.
"Its business prospects are quite good," he said.
"We expect the service to help generate about 10
billion yuan annually for operators and service
providers in the wireless value-added services
such as SMS, MMS [multimedia-messaging service]
and WAP [wireless application protocol]."
Both China Mobile and China Unicom have
pledged full support to the SMS business center.
The new service offering may also boost the
take-off of so-called m-commerce - business
transactions carried out over mobile phones.
According to a recent study by US-based Telecom
Trends International, the global number of mobile
commerce users will grow to 1.67 billion in 2008
compared to 94.9 million in 2003. Revenues
generated from mobile commerce are forecast to
exceed $554.37 billion in 2008 from $6.86 billion
in 2003. Clearly, it's a bad time for the SMS
volumes to shrink.
(Asia
Pulse/XIC) |
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