The robustness of the A2P SMS market has surprised me, granted many analysts have been predicting its decline for the past 3-5 years, however, its continues to grow. Over the past couple of weeks I’ve seen a number of things start to point towards the corner could be in sight.
- Personal experience (its always very dangerous to use this), so I limit the impact to just the US market no more. I was ordering some coat hooks, and look at the prominence given to Facebook Messenger versus SMS in the above picture. This is not a sophisticated business like Uber or WhatsApp. This is a hardware retailer’s website. A2P IP messaging is going mainstream in the US.
- NIST depreciated SMS for 2FA (2 Factor Authentication) last year. There are work arounds, so 2FA becomes more complex and hence more of a service than simply using an SMS API, as we saw in this Nexmo weblog. And the increasing use of home based routing from carriers to improve security is further testament. Its not black and white on SMS 2FA, its just more complex.
- Uber was 17% of revenue Twilio revenue in 4Q16 and is now about 12% in 1Q17, according to Northland Capital Markets. Improving the revenue mix is always good. Also Uber is working on increasing use of A2P IP messaging, e.g. push notifications, Facebook messenger, etc. Driving this change is customer preference, as well as economics, at volume the difference in price is 0.00005c (A2P IP messaging) versus 0.05c (A2P SMS).
- Twilio finally GA’ed its multi-channel messaging API (across SMS and IP Messaging), catching up with where Nexmo has been for several years.
- And as reported in previous weblogs inter-carrier aggregators are consolidating the market, which enables then to lower prices and aggregate more margin such as BICS and tyntec.
Globally A2P SMS will continue to grow, but we should look more carefully at this increasingly complex market as it shifts, albeit slowly, to IP.
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