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Can Google's RCS Overpower iMessage and OTT Apps?

February 28, 2017

It’s hard to find a messaging app that does it all, especially if you’re an Android fan. iPhone users have been benefiting from iMessage for years, but Android still doesn’t offer an SMS system that meets user expectations. As a result, users have been downloading other over-the-top (OTT) messenger apps like WhatsApp and Facebook Messenger to make up for the lack of features. While this is great for mobile users, it’s cutting into mobile carriers’ SMS revenues.

Speaking from a personal standpoint, I can see how this particular point of revenue may be struggling. My first smartphone was an Android, and I downloaded every messenger app available at the time to see which one would work best for me. I hated the communications application that came with the phone, got tired of having my phone blown up with notifications due to group messages with my friends who had iPhones (anyone with an Android knows this struggle), and just wanted to be able to use some fun features while talking to my friends. The communications application that came with my Android had none of that, so I went in search of an SMS app that did. Now that I have an iPhone, the only messaging app I use is iMessage because it has all the capabilities I want. In terms of revenue score that’s: Android – 0, iPhone – 1.

According to ABI Research, I wasn’t alone in my frustration. The company predicts that, by 2021, global operator revenue is expected to decline 24 percent, from $74 billion to $56 billion, largely due to the impact of OTT chat apps. To combat this very real threat to global operator revenue, Google is making efforts to sign up mobile operators and device manufacturers to its Rich Communications Services (RCS).

RCS is an upgrade to the SMS text messaging standard that allows mobile carriers to offer many of the same features as messaging apps. This includes capabilities like group chat, VoIP and video calls, and the ability to share media and high-resolutions photos. So far, Google has found success with converting 27 carriers and smartphone makers, including telecom companies like Orange, Deutsche Telekom, and Globe, as well as phone vendors LG, Motorola, Sony, HTC, ZTE, Micromax, Nokia, Archos, and Android One.

With such popular companies jumping on the RCS bandwagon, more vendors and telecoms might feel confident enough to give RCS a shot as well. Plus, because RCS relies heavily on the network effect, the more phones and telecoms that partner up with Google’s version, the more powerful it will be.

 If enough companies partner with Google, a number of positive things could happen. For example, the use of OTT messenger apps could decline, giving SMS revenue a much-needed boost. It could also help Android catch up to offerings from Apple’s iMessage. iMessage is one of the main reasons people love Apple as much as they do, so if Android can put out an equal or superior service, users may change loyalties.

Although this is a great idea, it may be too late for Google. The top four messaging apps — Facebook's Messenger, WhatsApp, WeChat, and Viber — have nearly 3 billion monthly active users combined. People tend to be creatures of habit, so there’s no guarantee that the availability of RCS from Google will make them abandon the communications applications they’re accustomed to. To get people to use the SMS service, Google is going to have to make sure that its RCS is like nothing anyone has seen before. If it can accomplish that, Android may be able to hijack some of iPhone’s loyalists. 

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