IM (Instant Messaging) / chat has been around for a long time. Before AIM (AOL Instant Messenger, 1997) and ICQ (Internet Chat Query, 1996), there was the command line function ‘chat’ on unix (early 1980s) which evolved into IRC (Internet Relay Chat,1988); and for the VMS (Virtual Memory System) crowd there was phone (sometime in the 1980s I remember using it). And I’m sure the IBM mainframe folks will have something from the 1950s/1960s. Ever since I connected my Commodore 64 to a bulletin board via a 1200 baud modem and racked up a massive phone bill, chat has been part of my communication tools.
Today, what started as IM / chat apps, like WeChat, Line, WhatsApp, Facebook Messenger, have evolved into something quite different. And something rather dependent on the country of use. Take WeChat as an example, to me its a bit of a crap messaging app as I find it slow and heavy on the phone’s resources. But to contact anyone in Huawei you need to use it. In China there are about 500M active monthly users, about 80% penetration of smartphone users. Its become a hub for all internet activity, the First Point of Contact with the Internet (FPOCI – pronounced fpocky). Its now a platform through which users find their way to other services, and how businesses find their way to customers. There are lots of articles reviewing the history and singing the praises of WeChat, the Wikipedia entry on WeChat is the best starting point in my opinion.
WeChat started out as chat app in 2011, it was endorsed by the Chinese government as part of their 5 year plan, and within 1 year had 100 million users. Why has WeChat achieved this service aggregration role in China? Clearly penetration is critical, that 80% figure. Government support is also a factor. And a steady roll out of features over the years including:
- Official Accounts, so you know its United Airlines contacting you with a message not some random phone number.
- Moments, social sharing, but with limitations so its not annoying like Facebook.
- Payments, digital wallet with about 60-65% adoption across users in China. Chinese New Year gifts of cash ‘Hongbao’ which almost every Chinese person gives to their family and close friends drove adoption.
Popping over the East China Sea / Sea of Japan to Japan. LINE provides a similar yet different example of the evolution of a chat app into a much broader platform, a FPOCI. It has close to 90% penetration of smartphones users being monthly actives. Amongst teenagers / twenty-somethings its as close to 100% as you can get. LINE started in 2011 and achieved 100M within 18 months. Stickers are a mainstay of LINE, there are even TV series based on the classic sticker characters, and Japan TV series offer their own series of stickers on LINE – its big business. There are even LINE stores to buy fluffy physical realizations of all their stuff. What I find interesting is some salary-men in the telcos discount LINE’s ability to become a FPOCI because of this origin, but they’re being proven wrong.
To assume LINE is an anomaly based on that weird Japanese kawaii aesthetic ignores the similar roadmap LINE has to WeChat. Official accounts, payments, social sharing, voice/video, ride-hailing, music and video streaming services, MVNO, and extensive service roadmap with a focus on measurable enterprise campaign management. Last year we saw the LINE Bot Awards that I reviewed in this article. We’re now seeing steady realization of some of the hacks. There’s little hype, just heads-down focus on building out their bot ecosystem. I love their focus on what it all means to the LINE community, the LINE Spirit, rather than shouting “APIs, woohoo, if you don’t use them you’re lame!”
Here in the US, Facebook is working hard on WhatsApp, Messenger, and its Messenger API program just with lots more hype than LINE and WeChat. And they are naturally watching the more advanced WeChat and Line services closely, as they dominate A2P messaging in both countries, which is what FB wants to do in the US.
Last year I wrote a weblog on “Is the tide starting to turn on A2P SMS?” highlighting some of the factors in western markets that could herald the substitution from SMS to IP messaging. And also a weblog on the important initiative tyntec is doing on Fixing US Long Code A2P SMS, to try and fill a hole in the usefulness of SMS in broader A2P applications, the lack of official accounts.
What prompted me to write this article isn’t the usual RCS (Rich Communications Suite) revival at MWC. Yet another year, yet more of the same promises, yet more of the same self-satisfied arrogance. Rather the financial analysts are talking about RCS, and CPaaS providers are claiming it will substantively impact their 2018 revenues. This is a very different level of commitment, CEOs of listed companies are partially staking their market valuations on RCS. My focus here is RCS in the US, as we must look at messaging / FCOPI on a country by country basis.
For those of you that do not know RCS, its currently being positioned as the next generation of SMS and enabling cheap app-like experiences without the need for smartphone apps. Like WeChat’s mini-apps. The standardization work started back in 2007, in 2015 I was calling for a RCS reset given the mistaken assumptions its been built upon. I first wrote about it in 2008, with qualified interest.
Setting out some of the RCS challenges for the US:
- Apple isn’t doing RCS, no telco has the power to tell Apple what to do on this, not even China Mobile. iMessage is important to Apple, and RCS messes with that. So that’s 35% of the US smartphone market which will require the user to download something. 65% smartphone penetration is likely the max given the needless network dependencies built into RCS.
- There’s no way to do Official Accounts, its just some random phone number sending a message. Line, WeChat, FB Messenger solved this early on in their development. And the tyntec initiative appears stuck in the old-boy’s network of US legacy telecoms.
- SMS isn’t that social anymore, that’s moved onto social networks and chat apps, its essentially a notification service, “Delivered: Your Amazon Package….”
- The US operators are all taking different approaches, and Google is simply hedging its bets as it seeks an iMessage competitor.
- There’s a litany of other functional and technical gaps, as Dean Bubley has pointed out many times.
RCS in its current form will not deliver FPOCI at any point in the future. Its simply an expensive next generation notification service, when the cost of notifications are moving to the cost of compute, 0.0000005c per message.
So what should the US Telcos and Google do? In principle its quite easy. Create a joint venture FPOCI, copy WeChat / Line with US localizations, the FCC is so compliant these days you’ll only see encouragement there. And all adopt it, no messing about with variants coz you have special needs, and share in the value created. Telco’s customers are moving to unlimited data plans, so your value to them is principally internet access. Focus on that and let a dynamic team of internet / consumer marketing high fliers create something unique and special for the US market. You could have it launched before the end of the year if you start now.
The CPaaS providers will still need to aggregate across all the messaging options, so they’ll make money, and the US consumers will have some real competition to emerging iMessage and FB duopoly. What’s to loose?