Samsung Rolls Out ChatOn, another Challenge to Texting Fees

Advertisement

Samsung (PINK:SSNLF) has released a Web-based version of its mobile messaging client ChatON, another step in the company’s effort to help users shift away from traditional text messaging. The free application joins the growing ranks of apps designed to help users avoid the short-message service (SMS) texting rates imposed by wireless carriers.

ChatON was originally released to the Google (NASDAQ:GOOG) Android Market and Apple (NASDAQ:AAPL) App Store last year. The new version works on desktop computers and feature phones as well as smartphones. The app uses a bright, simple interface that many users find more appealing than the standard text-message format. Additional features include group chats, the ability to embed audio and video into messages, and a social networking-style profile for each user.

Samsung’s project is the latest of a growing field of cross-platform mobile messaging services. Facebook Messenger, Skype, and Apple’s iMessage have all found a following among mobile users. While data connectivity is a requirement for most smartphone contracts, smartphone users in particular seem to find applications like ChatOn attractive because text-messaging packages add yet another layer of costs to their service contracts.

Technology research analysts Ovum reported that mobile messaging services such as ChatON last year cost service providers $13.9 billion, or 9% of total SMS revenue. That’s a 60% drop from the $8.7 billion decline posted in 2010. Text messaging rates have been criticized as notoriously inflated, and many subscribers are more than happy to embrace workarounds.

Data-plan fees and profits are much lower than those for texting. Industry trade group CTIA reports that annualized yearly text messages brought in $2.12 trillion by mid-year 2011, with monthly text messages accounting for $195.9 billion. Annualized wireless data revenues, meanwhile, were only $55.4 billion for the same period.

Telecom companies will have to push innovation to help stop the revenue leak. Ovum analyst Neha Dharia suggests that service providers form partnerships with application developers, granting the latter access to end-user data that would ordinarily remain off limits. Dharia also suggests partnerships between competing providers, as the companies face nearly identical attacks on texting fees. Improved service, rather than hiking rates, may help keep SMS a viable option for users.

But it won’t be an easy fight for carriers, especially with industry giants like Samsung standing on the opposite side of the ring. Samsung now accounts for 22.5% of the global smartphone market, second to Apple, and is the leading provider of Android devices. The Android and iOS operating systems both make it easy to use applications that circumvent carrier text-message services, and both Samsung and Apple promote the apps.


Article printed from InvestorPlace Media, https://investorplace.com/2012/03/samsung-rolls-out-chaton-another-challenge-to-texting-fees-ssnlf-aapl/.

©2024 InvestorPlace Media, LLC