The message is the medium

Article tiré du magazine The Economist.

Messaging apps are eating SMS

“I PROPOSE, if and when found, to take him by his beastly neck, shake him till he froths, and pull him inside out and make him swallow himself.” It is not often that Silicon Valley’s denizens quote P.G. Wodehouse. But this is what Benedict Evans of Andreessen Horowitz, a venture-capital firm, expects the success of messaging services could do to both mobile and corporate software.

The most striking example so far of this process came on March 25th when Facebook announced at a conference in San Francisco that it has started to turn its Messenger service into a “platform” that can carry, and be integrated with, all manner of apps created by other software firms. So Facebook Messenger, which is itself an app for smartphones that run on Apple’s iOS and Google’s Android operating systems, will then be competing with those operating systems’ services for buying apps and downloads. In plain language, it could become the app that ate Apple’s app store.

The prospect may surprise those who thought messaging apps were just another way for teens to share this week’s tragic news about One Direction (a pop group, apparently). But their continuing explosive growth suggests that they will be a lasting phenomenon. According to Flurry, a market-research firm, the total number of users grew by more than 100% last year (which explains why old-style text messages seem to have peaked, see chart). Together the ten biggest messaging apps, which include KakaoTalk, Viber and WeChat, now boast more than 3 billion users. WhatsApp, the leader of the pack, alone has 700m—a big reason why Facebook last year paid $22 billion for the firm, despite continuing to develop its own Messenger app.

As the number of users has grown, specialised versions of messaging apps have emerged. What made Snapchat popular was the ability to exchange pictures that vanish after a few seconds (and often contain nudity). Secret, Whisper and Yik Yak let users remain anonymous (including bullies, unfortunately). Telegram stands out because of its strong encryption (making intelligence services unhappy). And FireChat works without cellular service: users’ phones communicate directly, which was a popular feature during recent protests in Hong Kong.

Use of SMS and of WhatsApp

The time users are spending on messaging services has encouraged investors to value them highly, even though it is not yet clear how some of them will make money—much as happened with the rise of Twitter and with Facebook’s original service, its social network. WhatsApp handled more than seven trillion messages last year, about 1,000 per person on the planet. In Britain users spent as much time on WhatsApp as on Facebook’s social-networking app, according to Forrester, another research firm. In China subscribers to WeChat are estimated to use the app for about 1,100 minutes a month on average.

Although the numbers are smaller, something similar is happening in the business world. Slack, a messaging service that works on both smartphones and personal computers, seems to be succeeding where other attempts to create “corporate social networks” have failed, by replacing e-mail as the main communications channel inside firms. Just over a year old, Slack now has 500,000 users. It says they typically spend 135 minutes each working day on the service and altogether send 300m messages a month—which is why investors valued the firm at more than $1 billion when it raised capital in October.

Instead of inundating workers with individual messages, Slack divides the digital deluge into more manageable “channels”, each dedicated to a project or a team. Users can create and subscribe to such channels, exchange messages, post links and upload files—all of which are saved. Besides reducing the time everyone spends handling e-mail, the channels also help new employees to get up to speed quickly, instead of starting with an empty inbox.

Slack is not the only service of its kind. Other startups, including Quip and HipChat, offer similar features. Established firms are not far behind. Cisco, a maker of networking gear, recently launched a service called Spark, which looks and feels a bit like Slack, but lets users switch to voice and video communication if needed. IBM will soon follow suit with Verse, a web-based e-mail service which lets users exchange instant messages, but also employs the firm’s artificial-intelligence engine, Watson, to sort messages and even reply, to reduce the communication burden.

To please investors as much as they evidently please their users, messaging services, in their consumer and corporate incarnations, will eventually need to turn a profit. There are several ways in which they aim to do this. One is by selling add-ons, at a modest price but in large volumes: for instance, in Asia some messaging services sell “stickers”, little pictures that let users make their messages more expressive, for something like a dollar a dozen.

Another way to make a living is to take a cut of any e-commerce or money transfers that take place over their networks. WeChat users have long been able to order taxis and buy air tickets over the service, and as its popularity keeps growing, so will its ability to start charging businesses for sending customers their way. Snapchat already lets CNN, National Geographic and other news media publish articles on its service in return for a share of any advertising revenue. Line and Snapchat have recently added a payment service, as has Facebook Messenger.

Although most messaging services are free, WhatsApp charges a small subscription fee, of 99 cents a year, something the main social networks have shied away from. Once users, and all their friends and contacts, have grown accustomed to using a particular messaging service, it should become easier to get them to cough up a small annual payment. Multiplied by a huge user base, with only modest running costs to subtract, that could provide a handsome profit.

For corporate messaging services, there is even more potential for charging such recurring fees, since businesses are already used to paying annual licensing and maintenance charges for the e-mail systems and other software that these services aim to replace. Companies large and small have all sorts of online functions, from customer support to the tracking of software bugs, that bombard them with alerts and queries—so anything that helps them deal with these more efficiently is worth paying for. Slack’s customers, for $7 a month for each user, can pump unlimited numbers of external messages into channels, turning the service into a hub for all the flows of information that make a company tick.

Yet the juiciest prospects may lie in the example Facebook set this week—allowing messaging services to become platforms on top of which other firms can develop content and apps, with all sorts of means to generate revenues. WeChat, with its various add-ons, is already a platform of sorts. Facebook now intends to go even further and wants its Messenger to become the point of integration for other services and apps. Users will, for instance, be able to open another app simply by tapping a link embedded in the flow of messages.

Such moves to become the platform that supersedes other platforms are a natural evolution in software, says Venkatesh Rao of Ribbonfarm, a consulting firm. Similar battles have happened before, most notably in the “browser wars” of the mid-1990s, when Netscape’s Navigator tried to usurp a dominant platform, Microsoft’s Windows operating system. This time the incumbents are Android and iOS, and they will certainly fight back.

 

From the print edition