Light Reading

Operators Can't Kik the OTT Habit

Sarah Reedy
12/12/2013
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Do you Kik? Ever even heard of it? Maybe not unless you're under the age of 20, but it's the latest over-the-top (OTT) platform to join the 100 million club and give the operators a run for their SMS revenues.

The mobile messaging app announced today that it has more than 100 million registered users, triple what it had this time last year. The app has been around since 2010, but Kik CEO Ted Livingston tells CNet it's now signing up around 250,000 new registrants every day, primarily teens in the US.

Kik is essentially another SMS alternative, but it lets its users pick a user name rather than use their phone number. So you can give out your Kik name over other popular OTT sites such as Instagram, Tumblr, and Twitter to chat without having to reveal your phone number. People aren't using it because of the expense of SMS, but because it's more fun.

Kik is also using open APIs to let third-party developers build apps on top of the messaging service for games, music-sharing, or location-based services. One game, Costume Party, a mobile version of Pictionary for Kik users, already has around 4 million users.

One-hundred million may not carry the weight that it used to -- WeChat and Line have around 300 million, and KakaoTalk, Viber, and Tango have all cracked 100 million -- but what's remarkable to me is the level of innovation that continuously comes from the OTT camp, as well as the success that so many of them are having. Kik is now getting more downloads than another OTT success WhatsApp in the US, but WhatsApp is managing to hold on to more than 350 million users.

The traditional knock on OTTs is that they can't achieve ubiquity, like SMS, but that is increasingly becoming a moot point. It's also becoming clear that this type of innovation won't (ever?) come from the wireless operators. The smart ones are striking partnerships in the space, but even those, like Sprint Corp. (NYSE: S) with Jibe, don't even come close. Frankly, even Telefonica Digital's much-heralded homegrown Tu Go service that lets you text from your tablet is boring in comparison to what the OTTs are doing. (See Sprint Jibes With OTT Comms, Genband Acquires fring to Help CSPs Go OTT, Meet Voxox, the OTT CLEC, and Et Tu, Telefónica?)

I'm not sure what the answer is here. I've come to realize it's just not in operators' DNA to be this innovative. I would suggest that they partner, but I'm not sure a company such as Kik or WhatsApp would be interested. SMS certainly isn't dying, but it's also not thriving, and OTTs continue to point out how much it lacks.

The operators could learn a lot from these OTT players, and, if they're smart, they'll play close attention to how the next generation of mobile users chooses to communicate.

— Sarah Reedy, Senior Editor, Light Reading

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MordyK
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MordyK,
User Rank: Light Sabre
12/12/2013 | 2:56:48 PM
Telco as identity
On the financial side I think you're right, but on the carrier's relevance I think one can argue that they can wield some influence and bring real value.

Even if the phone number is not used as the public ID, it's a useful identity for an array of uses. If carriers created a basic framework for using phone numbers as a universal underlying identity - AT&T is doing something along these lines - akin to FacebookConnect and its Google and Twitter equivalent I think it would add relevance.

That said it's gotta be dead simple which again makes it impossible :)
SarahReedy
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SarahReedy,
User Rank: Blogger
12/12/2013 | 4:14:39 PM
Re: Telco as identity
The GSMA was working on that, too, with is OneAPI initiative to let mobile users have use their phone number as their sign-on and universal identify. I haven't heard much about it since it was launched though. It would have to be very simple and incredibly useful. I just don't see it happening anytime soon.
MordyK
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MordyK,
User Rank: Light Sabre
12/12/2013 | 5:04:15 PM
Re: Telco as identity
Te littered fields of carrier possibilities. When you look at nearly every popular app and you look back at old telco promoted possibilities, you see a whole lot of vision but a lack of follow-through
SarahReedy
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SarahReedy,
User Rank: Blogger
12/12/2013 | 8:25:13 PM
Re: Telco as identity
Yeah, it's pretty frustrating. I bet the execs in charge of innovation at carriers (those that have them) are pretty frustrated too getting good ideas and forward momentum blocked by bureaucracy. 
MordyK
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MordyK,
User Rank: Light Sabre
12/12/2013 | 8:34:52 PM
Re: Telco as identity
Carrier's are ruled by the RAN guys along with their few "chosen" vendors, and anything that they perceive interferes with their systems will get shut down. If an idea passes muster they put their overengineering mindset and choke the concept until its dies a slow death, or is picked up by an OTT and then they complain that OTT's are riding their networks for free.
SarahReedy
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SarahReedy,
User Rank: Blogger
12/12/2013 | 8:38:08 PM
Re: Telco as identity
Well said. :) That's why innovation departments spin out, but I'm even losing a little faith in that model...It takes time, but how long can we wait?? The industry isn't waiting...
MordyK
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MordyK,
User Rank: Light Sabre
12/12/2013 | 8:51:54 PM
Re: Telco as identity
Personally I believe some formof chnge is right around the corner, and the griping around OTT's is really the hint.

Per my post on the now defunct InnovationGeneration which I reposted on my blog, Networks are losing revenues from voice, SMS, roaming (to date in Europe & to an extent TMo in the US) and other revenue models, all while the costs of the network are increasing exponentially which is only partilly being offset by the rise in M2M & IoT.

They face a choice of following their landline brethern into the land of dumb pipes, or they will be forced to think beyond the RAN. The griping about OTT's is essentially acknowledging the disease, and there's a saying that goes: acknowldging/knowing your disease is half the cure.
SarahReedy
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SarahReedy,
User Rank: Blogger
12/13/2013 | 10:30:48 AM
Re: Telco as identity
I hope you're right, Mordy! They have the assets, as you say, but I have a hard time believing they'll build it in house or partner in a way that leverages the innovation of the OTTs without crushing it internally.
MordyK
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MordyK,
User Rank: Light Sabre
12/13/2013 | 11:22:52 AM
Re: Telco as identity
unfortunately my optimism is tempered with those doubts as well.
SarahReedy
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SarahReedy,
User Rank: Blogger
12/12/2013 | 4:18:21 PM
Kik
Anyone out there use Kik? I hadn't heard of it so I asked some much cooler 15 and 16 year olds. Both had heard of it, and one uses it occassionally. She said that all the juniors and seniors at her high school use it to do group messages. She says,

"I like it but I just don't think there's that much difference between that and imessage except for group texts can be sent faster which is a benefit!"
Carol Wilson
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Carol Wilson,
User Rank: Blogger
12/12/2013 | 4:38:55 PM
Re: Kik
What's the business model? Where are they making their money - on selling the app or things that go with it?
SarahReedy
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SarahReedy,
User Rank: Blogger
12/12/2013 | 4:46:39 PM
Re: Kik
It's a free app, and I don't think it has ads, but Kik has built a Card platform for games and the like. They're free, but Kik charges brands and other companies for custom cards.
MordyK
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MordyK,
User Rank: Light Sabre
12/12/2013 | 5:02:58 PM
Re: Kik
I did for awhile when I was still on BB and needed a cross platform messaging service but then BB kicked them off because they were competing with BBM. Now i'm largely on whatsapp.
SarahReedy
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SarahReedy,
User Rank: Blogger
12/12/2013 | 8:26:43 PM
Re: Kik
Ah yes, things got pretty ugly between the Canadian companies: http://www.engadget.com/2013/10/08/blackberry-and-kik-settle-lawsuit-over-messaging-patents/
Kruz
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Kruz,
User Rank: Light Sabre
12/13/2013 | 10:08:25 AM
Re: Kik
Have never heard of kik. But if its offering is plain IM, there is no room for competition at this stage. Other IM have reached high maturity in terms of UI and features. A nice innovation is the user name feature that is cool for privacy but not practical; that's how Whatsapp became so popular, it was just there, ready to be used the moment you installed the app. New IM app will need to innovate and IMHO, will need to evolve into a social hub. BBM with its channels might just make it there. This will be a treat to the traditional social players who will have to enhance their mobile application experience.
SarahReedy
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SarahReedy,
User Rank: Blogger
12/13/2013 | 10:28:48 AM
Re: Kik
IM was just the start for Kik. It's differentiating with its Cards features and in-app games, interactivity, etc, in addition to the user name functionality. But, I agree, it's a really crowded space that's a bubble right now. Not everyone one can last.
DOShea
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DOShea,
User Rank: Blogger
12/16/2013 | 10:47:02 PM
Re: Kik
Are any of the other OTT apps looking like fads to any degree? I know with hundreds of millions of users, the obvious answer is know, but when a newer one comes along like kik, how is it affecting the growth pace of the older apps, if at all?
SarahReedy
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SarahReedy,
User Rank: Blogger
12/17/2013 | 10:29:18 AM
Re: Kik
I'm not sure how much one is cannabolizing the others, but that's a good question. Most have very similar feature sets, which is one reason why they can't all last. But, ultimately, you go where your friends are. People would get bored pretty quickly -- or move on to the next app -- if everyone they know is too.
elligottmc
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elligottmc,
User Rank: Light Beer
12/17/2013 | 9:46:31 AM
WhatsApp
Maybe I missed this point in my skimming of the article, but one of the main reasons WhatsApp has caught on with the younger crowd (and older lads like me) is that it gets around messaging costs for texting, particularily international.  Get an ID and a data connection and your in business.  One thing the youth know how to do is avoid expenses.  OTT is the ultimate workaround.  Therefore it will continue to thrive (much to the chagrin of providers).
SarahReedy
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SarahReedy,
User Rank: Blogger
12/17/2013 | 10:27:52 AM
Re: WhatsApp
That is true for WhatsApp and other OTTs, but Kik, in particular, has said that isn't the case. Most of its users have unlimited SMS plans. They are using it because they like the anonymity of a user name instead of their phone number, so they can connect with people on social networks. Like GroupMe, WhatsApp and others, I think people also like Kik for group messaging with their non iPhone friends.
Kruz
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Kruz,
User Rank: Light Sabre
12/17/2013 | 4:31:12 PM
Re: WhatsApp
True. But other than price and anonymity, people also opt for OTT players for a richer experience. SMS doesn't satisfy users need for an instantaneous 2 way chat with video, imaging, groups, etc... OTT's all in all experience evolved in a way SMS's experience should have.
SarahReedy
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SarahReedy,
User Rank: Blogger
12/17/2013 | 4:34:07 PM
Re: WhatsApp
iMessage does it for me on the iPhone, but that is OTT, and I'm not that young and hip. The native experience on Android was surprisingly bad for MMS, video sharing and group messages. I would have definitely used on OTT app if I stuck with Android.
lborgstede
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lborgstede,
User Rank: Light Beer
1/21/2014 | 1:37:07 PM
OTT or Zipwhip

If you look closely you'll see plenty of new innovation in SMS. Last week at CES, Zipwhip and AT&T revealed a new iPhone cloud texting breakthrough. And then there's business texting. Thanks to companies like Zipwhip more than 200 million business landline and toll free numbers can be equipped with SMS texting. Police departments, radio stations, non-profits and other organizations are adding texting capabilities to their existing landline and toll free numbers to field customer inquiries, schedule appointments, send out reminders, take sales orders and improve customer loyalty. That seems innovative to me.

Kruz
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Kruz,
User Rank: Light Sabre
1/21/2014 | 6:10:01 PM
Re: OTT or Zipwhip
Its indeed innovative. That should happen when ott and operators work together.
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