SMS has other advantages, and some analysts believe it will become a major form of personal communication for the same reasons E-mail has replaced many phone calls. The recipient doesn't have to be there to receive a message; it's quick and unobtrusive and eliminates the risk of getting stuck in a long conversation. SMS shares these benefits and boasts a few others: It can be accessed most anywhere without a computer.

SMS messaging vs. E-mail

No one is predicting that SMS messaging will be as big as E-mail. But it has already proven its worth in Europe and Asia. According to research firm IT Analysis, cell-phone users worldwide send more than a billion text messages a day from one mobile phone to another, an average of one message a day per subscriber. In Western Europe alone, 186 billion messages were sent in 2002, according to consulting firm Frost & Sullivan. By 2006, that number is expected to reach 365 billion.

So what do all those messages say? "The most common application is friends pinging friends," says Greg Wilfahrt, executive VP of SMS.ac Inc., an SMS platform and messaging service and application provider. SMS "is affordable, it's instant," Wilfahrt says.

And it can be more than just a consumer tool. Some businesses around the world are finding ways to benefit from the technology.

Take some financial-services providers: HSBC Bank plc in the United Kingdom offers customers regular updates on their account balances. Irish brokerage Goodbody Stockbrokers sends its clients stock quotes. Deutsche Bank AG issues SMS transaction receipts to mutual-fund holders across Europe. And U.K. credit-card company Barclaycard will message customers if it detects unusual activity on their accounts in order to identify lost or stolen cards.

SMS also helps people and packages get around. Passengers on more than a dozen airlines, including British Airways, Air Canada, and Lufthansa, can sign up to receive flight-status updates. United Parcel Service Inc. customers in eight Asian countries can enter a package number in a text message to get tracking information. 

Governments find it helpful, too. In April, authorities in Hong Kong used SMS to send a text message to more than 6 million cell phones to quash a panic over the SARS virus. The message let citizens know that the city was relatively clear and wouldn't be officially declared an infected area. In Yorkshire, England, schools can use SMS to alert parents if their kids skip class. And in May 2002, a trial program let citizens cast votes in local elections.

The messaging technology is becoming an important part of people's lives in other ways. Homerton University Hospital in London uses SMS to remind patients of upcoming appointments, while Haukeland Hospital in Norway lets patients use it to schedule them. Police in Germany send descriptions of wanted criminals, stolen cars, and missing persons to cooperating bus and taxi drivers so they can serve as additional eyes on the street.

U.S. lags in SMS adoption

Despite the wide variety of applications overseas, the technology has been slow to catch on in the United States. One reason is technical. Many U.S. operators only started offering two-way messaging in 2001, and most handsets couldn't support it until recently. To complicate the problem, U.S. mobile providers use a variety of cellular standards and technologies, so, at least initially, an AT&T Wireless customer couldn't send an SMS message to a Verizon Wireless customer.

That changed in 2002. "The carriers looked at Europe, saw that carriers there were making almost 15% of their profits from SMS, and decided to interconnect," says Marc Vanlerberghe, CEO of messaging-infrastructure vendor Quios Inc. "That was the first big barrier." With interoperability, SMS subscribers doubled, according to research firm IDC.

A second problem for SMS is that talk is cheap in the United States, in contrast to other countries where any kind of phone call is relatively more expensive. American phone companies offer nearly unlimited local calls on wired phones, and mobile operators offer hundreds or thousands of minutes per month for a flat fee. As a result, there isn't as much demand for a cheap communications alternative.

"We don't have the same key market drivers," says Yankee Group analyst Linda Barrabee. "We have a lot of competition in the voice space. There's not an economic incentive to send a text message. In Europe, it's cheaper to text."

SMS is cool

So SMS has had to sneak into popular use through a tried and tested marketing technique: the coolness approach. Billboards and television ads showed hip young kids sending each other directions to parties via text. Then came SMS's seminal American moment. In January, millions of American were exposed to SMS--many for the first time--when American Idol host Ryan Seacrest held up a mobile phone on TV and invited millions of viewers to send a text vote for their favorite pop star in training. Over the show's 18-week run that season, viewers sent in 7.5 million text-message votes. AT&T Wireless says that a third of those people had never sent a text message before, and the company believes that many of them will continue to use the service to send messages. AT&T charged 10 cents for each SMS vote.

Technological change and marketing magic have added up to make SMS grow. According to the Yankee Group, the number of active U.S. users jumped from 16.5 million in 2002 to 31.5 million by the end of 2003. By 2007, more than 64 million users should be on board. And they're starting to generate significant revenue. SMS fees will account for nearly $1 billion in annual revenue for U.S. mobile carriers by year's end.

While U.S. SMS users probably won't ever produce text messages in volumes rivaling those of Europe and Asia, the technology is gaining adherents beyond American Idol voters. Sun's Pelletier has his assistant send him schedule changes, phone messages, anything that he needs to know right away but that isn't worth disrupting what he's doing. "It's an unobtrusive way of having a real-time communication with me," he says. If he's in a meeting, he can quietly receive messages without annoying others, and he can respond with questions or confirmations.

Security vendor Symantec Corp. offers a service that will send virus alerts to system administrators' cell phones. Subscribers to the system can indicate what types of messages they want--anything from only the biggest threats to every warning that crosses the system.

Symantec finds that SMS lets it send messages to tech administrators wherever they roam. "What we've found is that people typically have their phones, and they're usually on," says Sharon Ruckman, senior director for Symantec security response. "A customer might be at his son's soccer game, but he needs to know what's going on. It might be a Saturday morning, but he needs to know so he can make a decision."

That's a tool so useful some IT workers are building it themselves. Independent computer consultant and system administrator Garrison Hoffman often sets up automated alert scripts on his clients' systems. If the program registers a device failure or intrusion attempt, it sends an E-mail to his cellular provider's SMS gateway, bouncing a warning directly to him. "At any point, if there's something happening that I would want to know about, I can just get an alert to my phone," Hoffman says.

He's even extended the technology to help his buddies. A friend suffers from migraine headaches that come and go depending on the weather, so he wrote a script that checks the Web page of the National Weather Service every couple of hours. If it detects a change in barometric pressure over a certain threshold, the script sends his friend an alert, giving him time to take medication or other preventative action.

Many businesses use SMS as a promotional tool. Quios provided the infrastructure for Coca-Cola Co. to run a massive campaign in Europe. Coca-Cola printed a phone number on 10 million cans of soda telling drinkers where they could send a text message to find out if they'd won a prize. "It's very easy," Quios' Vanlerberghe says. "You don't have to send a letter, you don't have to sit at a PC."

SMS also enabled Coke to collect large quantities of data on its customers. "The brand can learn interesting things about the consumer," Vanlerberghe says. "People will text in the codes when they're drinking their Coke; they're not going to walk around with the can for hours. So it shows you when they're drinking, how often they're drinking, and gives an example of how Coke is consumed through the day."

SMS text messaging also can save lives. In California, a program called Emergency Digital Information Service uses SMS to keep citizens prepared for emergencies. A handful of agencies across the state have access to a pipeline developed by the governor's Office of Emergency Services and can send messages to the public whenever it's necessary. Citizens can subscribe to whatever alerts they want to receive--earthquake advisories, blackout alerts, information on kidnapped children, among others--and get the critical information on the situation.

Using SMS to connect machines

Some businesses are finding uses for SMS beyond connecting people. In some cases, it can be a cheap and effective way to connect machines. IBM is licensing a technology that could mean new freedom for athletes with a history of health problems. A heart-rate monitor is strapped on an athlete's arm, and using a Bluetooth wireless connection, it stays in contact with the wearer's cell phone. If the athlete's heart starts to beat too fast, the monitor sends a message to doctors and family.

Drivers without change can use SMS to pay Reino's parking meters.

In a less-crucial use, Reino Parking Systems Inc. makes an SMS-powered parking meter. Every Reino MultiBay meter is equipped with a cellular modem that keeps it in touch with the home office. If people park and don't have change, they can call Reino's toll-free number, punch in their credit-card information, and buy time; the system sends an SMS message to the meter telling it how much time has been added. It also sends a warning to users before time runs out, so they can put more money in the meter.

That simple functionality can help cash-strapped cities, says Reino president Patrick Ryan. "Typically, parking meters have been paid with coins," he says. "But in the U.S., you're limited by the fact that the biggest commonly used coin is the quarter. If you want to charge $4 an hour, you're going to need 16 coins, and that's not easy to do."

The MultiBay meters are already in use in cities around the world; Reino just finished its first U.S. trial program in Washington, D.C., and the meters are being installed in San Francisco. They're likely to pop up in a number of other cities within the next year.

Before this fairly new technology becomes a mainstream business-communication tool, it needs to overcome some problems. In tests last year, Web-performance-monitoring firm Keynote Systems Inc. found that 7.5% of text messages sent in the United States weren't received within two minutes and arrived either late or not at all. Delivery failures were higher when messages were sent between different carriers' networks. Vendors hope error rates will fall as network-to-network capabilities are improved.

But such a high loss rate could be a deal breaker for many businesses. "If people are using [SMS] for urgent communications, there are some quality-of-service issues that need to be addressed," says Yankee's Barrabee. "For use in the enterprise, you may want to get confirmation that a message was received."

Another issue is that most businesses don't buy cell phones and voice service for individuals at a business level, so it's unclear how employees would be reimbursed. When the Yankee Group surveyed business-technology managers about their wireless plans, "E-mail access still reigns supreme and remains the key application driver for wireless," Barrabee says. "SMS is largely a consumer application."

Some businesses are waiting for higher-quality SMS. Patrick Wise looked at SMS two years ago when he was forced to find a replacement for pagers. As the VP of advanced technology for Landstar Systems Inc., the shipping and logistics company, he's responsible for the technology that gets information to drivers and lets them know when and where to pick up their next load.

Landstar used to subscribe to a two-way pager network that operated on the FM band. It covered 95% of the geography the company needed and let drivers confirm that they were going to make a pickup. But the provider went bankrupt--victim of pagers' declining market share and increasing FM access costs--and Landstar needed a replacement fast. "The collapse of the pager industry forced us to do something," Wise says. "That was a core part of our business process."

Wise looked at SMS but decided it wasn't a viable option because the technology wasn't widely deployed. And since it didn't allow messages to queue up when a driver was out of the network coverage area, messages could get lost.

Still, Wise hasn't written off the technology; he figures it will be viable in three to five years. What's needed is expansion of high-speed cellular networks and greater adoption by Landstar's drivers. That will happen as more of them trade in their older-model phones for ones capable of SMS. "Our tack will be to avail ourselves of the available technology and let our users select," he says.

Business adoption of SMS in the United States may take time, but it seems clear that it will become one of the many communications tools businesses will use to keep information flowing. "There are real opportunities to use SMS within an enterprise," says analyst Barrabee. "It's a very inexpensive option; it's ubiquitous; it's on the phone; it's in with your address book. It's an underutilized, undertapped opportunity."

This article courtesy of Information Week.