iMessage & The Canadian Impact

The launch of iMessage was an announcement with pretty significant impact on a few big/hot tech companies in Canada. Kik has obviously built a private messenger service around iPhone, RIM has taken an aggressive stance on promoting BBM, and of course lets not forget all the Canadian telecos.

Being an investor in Kik and some others impacted by the new iOS announcements, Fred Wilson wrote a brilliant post analyzing the impact. “Expect platform owners to work against you”.

In fact it was so interesting, that the product manager for RIM’s BBM service re-tweeted it (note that Theban is a good friend).


Fred Wilson to devs: Expect platform owners to work against you | Tech News and Analysis
12 hours ago

Which prompted this amusing exchange between him and I.


@ThebanGanesh you sir… are an ass… re-tweeting this as a “platform owner”


@dpmorel lol – it’s a balancing act. Platforms need to protect themselves from the ‘tragedy of the commons’

It is a fascinating lens into how RIM thinks of BBM and their own platforms. Despite my “ass” comment, I agree with him. Innovation often comes from the community who build things for the platform. The platform then needs to pull the best ideas back into the mothership – sometimes as an acquisition, sometimes they build it themselves and take on the “incumbent” in the community. This is in theory a good thing. We want the best innovations to be widely adopted. We want private messenger everywhere so we can all stop paying atrocious rates for SMS.

And those atrocious SMS rates charged by carriers, brings me to my next conversation. A good friend of mine runs messaging at a major Canadian carrier. Him and I have had the debate several times over the past few months on whether or not private messenger is a big threat today and now for them.

What i mean is that the argument about building SMS over data to drive costs down will go away in a few years as soon as LTE is deployed so ideally I want to invest in a solution I can leverage for more than a couple of years or so…

Customer experience and scalability are key for me. If I am spending money to improve the customer experience, it has to be open to all subs without having to invite people, therefore is has to scale.

The problem I have with the kik, textplus and the likes is that they are closed communities of 100,000 in 30 different countries or so and only address their own P2P niche market whereas SMS is an open community of a couple billion compatible devices; no need to register, invite friends, etc… While P2P SMS is plateau’ing in Europe, A2P SMS traffic is growing at a 25% rate yoy. In Canada P2P SMS is still growing at a 20% rate yoy and the A2P side of the business is still non existent.

P2P = peer 2 peer (i.e. customer to customer), A2P = application 2 peer (i.e. app to customer).

That list contains some some big, big knocks on ALL private messenger services – iMessage, BBM, Kik, TextPlus, etc. They are closed communities!! Meanwhile, with SMS, I can literally text ANYBODY in the world. Also, private messenger solutions don’t (yet) provide a solution for applications to talk to customers (A2P). And the carriers have a very real solution coming – LTE with better SMS clients on phones. SMS was literally one of the best services ever created – open, standards driven, no registration, etc. Awe-inspiring engineering. And with LTE the carriers will be able to take advantage of the cost savings of routing SMS over data, and they’ll have the biggest community (5b GSM users) and simply the best solution.

Buuuutttt… its not here yet. And thats what this is all about. Messaging is in transition and there’s an opportunity to own “messages over data”. Richer messages, more social messages, better user experiences, more cost effective for customers, etc. Its a fat, fat bazillion dollar market. And thats why this has happened:

  • Apple launched iMessage, Facetime, etc
  • Facebook bought Beluga
  • Google + GoogleVoice + GoogleChat + Android push notifications
  • RIM doubles down on BBM
  • Venture industry putting big money into potential disruptors like Kik, Textplus, Color, etc

By the time carriers get LTE out the door with new devices in market, the top end of this market may have already been won to the tune of 200-500 million users.

There is maybe some good news for Kik out of this announcement. For a startup the biggest problem is almost never a competitor. The biggest problem is typically non-adoption. Nobody knows there is something better than texting available. Nobody knows that Kik exists. Well, Apple & iMessage are about to blow up the “private messenger” space. In an ideal world, as the market grows, Kik goes along with it.

It’d be amazing if Kik & RIM (or others from up north) could figure out how to own this market. There are huge opportunities still – the A2P problem, the “interconnect” problem, etc. Lets hope they can figure them out and build ginormous services.