Apple’s iMessage arrives Wednesday, could take big bite out of carriers’ text-messenging profits

“At a time when e-mail and many other forms of electronic communication are essentially free, wireless carriers are still charging as much as 20 cents to send a text message to a phone, and another 20 cents to receive it,” Jenna Wortham reports for The New York Times.

MacDailyNews Take: That scam is finally about to die.

“Paying so much to transmit a handful of words is starting to look as antiquated as buying stamps,” Wortham reports. “On Wednesday, Apple plans to introduce a new service called iMessage, which could quickly become the biggest fish in this pond. The service lets iPhone owners send messages with text, photos and video to other iPhone owners over a Wi-Fi or cellular data connection. The service, part of an update to Apple’s iOS mobile operating system, will automatically handle messages sent between iPhone, iPad and iPod Touch [sic] users who have upgraded to the latest software.”

“More than two trillion text messages are sent each year in the United States, generating more than $20 billion in revenue for the wireless industry. Verizon Wireless alone generates as much as $7 billion a year in revenue from texting, or about 12 percent of the total, Mr. Moffett said, and texting brings in about a third of the operating income,” Wortham reports. ” Srinivasan Keshav, a professor at the University of Waterloo who studies mobile computing, estimates it costs the carriers about a third of a penny to send text messages. Considering that the major carriers charge 10 to 20 cents to send and receive them, ‘it’s something like a 4,090 percent markup,’ he said.”

Read more in the full article here.

52 Comments

    1. I notice people aren’t printing nearly as much as they used to, including me. Used to be a thrill to print your own photos now not so much especially since there are terrific photo printing services out there that do a better job. So ultimately they are causing their own slow demand, though not demise. There are times you still need hard copy.

  1. Unless iMessage is opened up to all systems then it’s not going to have that much affect on what the wireless companies make off of texting. Most people don’t have an iPhone so those that do will still have to carry some form of texting.

    That’s why they’re going to unlimited texting for $20 or $30 per month.

    To say that iMessage is the end of texting fees is just plain fanboy bull. The iPhone will never have that much market share compared to all the handsets that can text.

      1. This has very little to do with Apple and everything to do with how the wireless companies structure their texting plans. Smart people do work at companies other than Apple. They can easily find a way around iMessage so that it doesn’t hurt their bottom line.

        One way is to cut out the cheaper texting plans and only offer unlimited plans at a higher price.

      1. in the corporate world BBM used to be big.
        but not as much anymore, my brother in law has a BB Torch 2 (company phone, not his choice) he told me he hasn’t used it in over a year, most of his contacts got rid of the BB and have either an iPhone or Android.
        He did mention that his next phone, he will get the iPhone as a choice, and they are thinking of adding iPad’s to the aging laptops they use. he’s excited.

        iMessage will be great, for Mac users.. but it will take the iMessage client for windows (and possibly android…) to kill texting. but remember, we will still use texting to those other phones that people are suffering with. texting plans are not dead yet… but they will take a big hit this week.

        1. iMessage is not for Macs or PCs, just iOS devices. So there’s no need for a Windows client.

          You’ll never, ever see an Android iMessage client either. Apple isn’t interested in getting more iMessage users; it’s using services like iMessage and Siri to sell more iPhones. Period.

        1. Sorry, I wasn’t clear with my statement.

          I’ve been with T-Mobile where you can have an iPhone without a data plan but most iPhones do require data so as far as iPhones go my comment doesn’t apply.

          I wonder if iMessage can tell if someone’s data usage has run out for the month. If it has then would they receive a regular text or would the iMessage just not be received? It’s likely that people who run out of data will get sent iMessages and never receive them.

          An iMessage flaw ???

        1. How does an iPad or iPod have anything to do with texting from a cell phone?

          As long as you receive texts from people that don’t have an iPhone you’ll need to carry some form of texting on your phone. The cheaper text plans are disappearing because of iMessage. The wireless companies will just change their pricing structure in order to negate any effect that iMessages could have.

          A more likely impact would be an increase in data usage with little to no affect on revenues from texting due to the pricing structure change. This could turn out to be something that helps the wireless company’s bottom line.

          1. All current iOS devices will have iMessage. That’s the point. If you don’t have cell wireless…it uses wifi. Just like email. The messages aren’t lost if you are not connected..the arrive when you connect to a network.

            Again, this is just like email…and email seems to work ok 😉

    1. The article didn’t say that iMessage was going end text fees, it said;
      iMessage was going to be big.
      Described how much profit carriers made from texting.
      It only said in the titlethat it would take a ‘bite’ out of carriers profits.

      I however believe in will consume data out of data plans so if users have low data plans, it could actually cost them more.

      Carriers will simply change their tariff structures to match how consumers use their network, to maximise profits!

      1. I was commenting on fanboy MDN’s comment that iMessage would take a big bite out of text messaging profits.

        I agree with you. I think this could very well add to the carrier’s overall profits due to increased usage of their networks combines with pricing changes.

    2. To paraphrase Churchill, it isn’t the end, or the beginning of the end, but it is the end of the beginning (of the elimination of separate texting fees). Once this service is available, many people will certainly drop to the lowest texting plan (since a good portion of messages will go to iOS devices; the killer is that messaging can also work on the iPod touch). As you already stated, that will put pricing pressure on the carriers. It’s not fanboy bull, it’s just basic economics. Apple has the infrastructure to support messaging at low cost (as do Google and Microsoft), and is therefore willing to undercut carriers to differentiate its platform.

    3. Greg you just don’t or won’t get it. PCs didn’t have icons until Mac, or mouses, or folders until Stevie showed them the way, now they’re universal! Once the other followers figure it out then they will all offer something similar and as Steve said, texting fees will disappear. Remember, this is APPLE! They lead and show the world how it’s done. Stick around, you’ll learn.

  2. Maybe I could look this up, but then you’d miss the chance to call me lazy.

    If you can send an SMS from the iPad to a cellphone, how do you send one from a cellphone TO an iPad?

  3. I’m looking forward to iMessage because it will be available for all iOS 5 users, not just iPhones. That’s right, the millions of iPad and iPod Touch users will also have access to it.

    iMessage creates another reason for people to join the iOS ecosystem.

    And for that matter, I only send text messages to other iPhone users anyways.

    1. I send SMS messages (free at my end, at least) to people without iPhones. It’s simple: use the email gateways that nearly every provider has; e.g.
           @vtext.com (Verizon)
           @text.att.net (AT&T)
           @message.alltel.com (Alltel)
      Someday, some cell provider will actually cover where I live, then I’ll be in line for an iPhone.

  4. My big question is, can it work without an internet connection (just with the people near you) kind of like pictochat on the ds?

    If so, this would be the file transfer thing I’ve been waiting for (whan’a give your friend a Vcard? you can’t just copy it to his device, You have to find wifi, email it, then wait for it to travel across the planet before it drives on his device. With this, just iMessage him)

    The palm pilot (the old 3com ones at least) had this in the 90s and I really miss it. (I think the newton had it too, but I never had one of those)

  5. Only a third of Verizon’s profit? More like a half. Verizon made $14.6B last year in gross profit, and $7B due to texting fees is almost half. The costs are negligible. I bet Verizon and AT&T were kicking and screaming when they found out about Apple’s iMessage.

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