Study: China set for SMS explosion

China has been slow to adopt SMS (short messaging service), but is now experiencing an explosion in demand which will see vendor revenue rise from US$234 million in 2001 to $750 million this year, according to research figures released Thursday by Pyramid Research.

That is nearly four times as large as SMS revenues in the U.K., which are expected to reach $204 million this year, Pyramid said.

SMS revenues will continue to rise at a CAGR (compound annual growth rate) of 84.4 per cent to reach $16 billion by 2007, from more than 500 million [m] mobile subscribers sending, on average, six messages per day, or a total 1.2 trillion messages for the year. The figure will outstrip SMS revenue for the whole of Western Europe combined, Pyramid said.

As SMS use rises, and Chinese users become more familiar with mobile data, opportunities will arise for other mobile value-added services (VAS) and for content providers. China Mobile (Hong Kong) Ltd. began a revenue-sharing initiative with VAS and content providers in early 2001 under the Monternet scheme, which currently has over 300 partners, according to Pyramid.

But to capitalize on this booming market, handset vendors and content providers need to act quickly, Pyramid said.

The findings echo those of a report by China’s Xinhua News Agency last month, which said that SMS traffic was outstripping projections, with 28.2 billion messages sent in the first half of 2002

Pyramid Research is the communications and Internet division of the Economist Intelligence Unit, part of The Economist Group.