Short Message Service (SMS) text messaging continues to be the principal mobile messaging technology and accounts for the bulk of carrier messaging revenues. However, according to the report, "Mobile Messaging: More Products, More Growth," that is about to change, with flashier technologies taking over the nation's mobile phones. For now, the major barrier to widespread adoption of mobile instant messaging remains the absence of industry standards.
"Revenue from SMS is leveling off and will decline in the future due to less price elasticity resulting from mature competition in developed regions," In-Stat analyst David Chamberlain said in a statement. "Margins, however, remain good for most carriers due to the inherent profitability of SMS."
Indeed, as SMS cools off, In-Stat expects Multimedia Message Service (MMS), a messaging technology that supports images, audio and video clips to grow at a 50% compound annual growth rate through 2009. This is in contrast to Enhanced Message Service (EMS), which offered similar, but limited functionality, and has virtually disappeared from cell phone displays.