Group messaging: the next big thing to invest in and deploy

Investors, handset vendors, pure players and web giants are investing a lot this year, but the industry still lacks the federation that is so vital for the success of group messaging. ProcessOne is showing the way forwards for the industry as a whole.

2011 is the year of group texting. Last year, 2010, was the geo-checkin’s fever (Foursquare, Gowalla, Facebook Places…) in the mobile app’s world.

However, since the beginning of 2011, in one single semester, there have been significant developments: $35 million has been invested in 4 start-up businesses; a pure player has been bought by Facebook; a service has been launched secretly by a Google subsidiary; and, last but not least, Apple has announced iMessage, a messaging service that aggregates SMS and group texting at the same time. If we dive deeper into the figures and names, we find that GroupMe raised $10,6 million in a series-B round of financing in January; GOGII (the creator of TextPlus) raised an additional $15 million in series-C (having raised a total of $28,33 million) in February; Kik landed $8 million in series-A funding in March; and Yobongo closed a $1,35 million funding deal in around the same period. In the meantime, Facebook bought a group texting start-up, Beluga for an undisclosed sum, and Google (via Slide) launched Disco… between GTalk and Google Voice initiatives.

You can remark that all these companies are US-based ones, but every day, a new group texting company is created somewhere in the world because of the market traction. Globally, the US is driving the demand for group texting (as usual for any mobile service), but remember that messaging in the US is different than in Europe and Asia. To summarize then, there are two signs that show that the trend towards group texting is becoming mainstream: firstly, there is a flurry of US venture capitalist activity; and secondly a web giant has acquired a start-up business.

But group texting isn’t new. Blackberry invented it (called Blackberry Messenger or commonly BBM) in June 2005, because of the arrival of mobile chat, like Windows Live Messenger, within the carrier sector. Reusing all of the infrastructure (network operating centers) put in place for push email, Blackberry developed its own protocol and Blackberry-to-Blackberry service in order to offer a simple and easy-to-use group texting feature without an additional charge, as long as users subscribe to a Blackberry data plan. BBM does not ask for a useless status update, but displays simple delivery information, reads “pushed” receipts, and has the ability to see if a message has been delivered or read.

Blackberry did not really market BBM heavily to the masses initially, because it was under the misconception that it might hurt existing high-margin SMS carrier’s revenue stream. But a year ago, Blackberry changed its strategy and began to clearly promote BBM in its global advertising. At the end of last year, Blackberry seemed a little bit angry and sued the Canadian pure player, Kik, for a patent infringement lawsuit. It then removed Kik’s app from the Blackberry AppWorld. Unique among its competitors, BBM seemed to be central to the Blackberry platform. Now, however, with the announcement that Apple will deliver the same feature in Autumn 2011 (with its iMessage solution), the future looks darker. This is because BBM works only on Blackberry OS and proprietary technologies. Should we trust the breaking news that Blackberry is launching a BBM app and service to Android and iOS platforms as well? Perhaps. But, I must point out that Blackberry appears to be following the same strategy than Palm did some years ago… and we all know where that ended! It seems that Blackberry is in a dead end, and it must position itself differently – not only for group texting services, which are mainly seen as an added-value feature for Blackberry devices. Blackberry must innovate and develop a new cloud messaging service that could incorporate push email and push group texting.

Group texting isn’t just a feature for mobile handset and platform vendors. Blackberry and Apple are experimenting with new ways to communicate in groups and share rich content while being mobile. The second largest phone maker by revenue, Samsung, is also planning a group texting service on its smartphones in the second half of 2011. What about Nokia, LG, HTC and ZTE…?

Yet, it isn’t just the vendors of mobile devices that are keen on this topic. In November 2010, Facebook introduced a similar new cross-platform messaging service, called Facebook Messages, aimed at enhancing richer communications between social groups, including friends, relatives and colleagues. Facebook Messages allows users to send and receive SMS messages, chats, Facebook messages and emails instantly in a “universal” inbox organised by groups or friends. To emphasize this notion, Augie Ray, Analyst at Forrester Research, wrote “Facebook isn’t interested in being a management or response tool for your flood of bills, email newsletters or other communications; instead, it’s about facilitating and enhancing your personal relationships.”

This service is an example of group texting that has been enlarged to embrace all communication silos. Indeed, I would call it group messaging rather than group texting, because group messaging deals with your friends and acquaintances and enables easy communication with them, regardless of what device they are using and what they are doing.

Why is there such an interest in this kind of new group messaging service?

There are three main approaches:

1. The bottom-up approach
   As explained by Bill Dudley, Group Director of Operator Services Product at Sybase 365, Network Unaffiliated Virtual Operators (NUVOs) provide basic services such as voice, SMS and MMS, as well as various other services over any mobile or wired network. Prominent NUVOs include Skype and Google Voice, and there are many more especially in group texting like Disco (Slide), GroupMe (Mindless Dribble) TextFree (Pinger) and TextPlus (GOGII). By providing E.164-style phone numbers as entry-point identity, they provide users with the ability to send text messages to one number or to many, and even make group calling at not really “low-cost” rates. Any text messages sent are priced as SMS rates (i.e. they count towards a monthly quota or bundle in an unlimited fee), determined by the carrier, for non-smartphone users. Moreover, most of the time, these group texting and calling services are using US-based numbers. Therefore, every text message sent or call received in Europe counts as an international SMS/call sent or received from the US and Canada. In a nutshell, this service is only amazing value when it is bundled with SMS/Calling plans provided by carriers or MVNOs. In October 2010, GOGII became the first company to adopt this strategy, when it signed a carrier partnership contract with Metro PCS Communications. In Europe, no one has yet signed such a deal.
2. The top-down approach
   Opposed to the bottom-up approach, some players like Blackberry, Kik and PingChat have built high-end IP-based group texting platforms and developed apps on the most commonly used mobile platforms (like iOS, Android, Blackberry OS, Windows Phone 7 and HP WebOS) based on the abilities of each push notification service. These IP-based services are free and enable users to share, via their carrier’s data plan, enriched content like pictures, video and geo-locations, between friends located in “closed networks”. The main drawback remains the lack of interoperability between each network. Most of the time, subscribers must draw friends’ attention to an app that they must then download. This complex equation refers to the “network effect” and is based on the principle that one user of a service can influence the service’s take-up by other users. If you remember, it follows Metcalfe’s law: the connectivity value is proportional to the square of the number of connected users of the service. None of the services mentioned above has yet reached the critical mass of subscribers required to be viewed as winners. Moreover, no real business model has been created yet, except that of selling platform and apps to handset or telecom equipment vendors.
3. The value-based approach
   As explained above, the main drawbacks of the last two approaches are pricing (for the first) and network effect (for the second). Potential subscribers of group messaging services are looking for much more – at least a cost-effective service and a new, intuitive and easy-to-use communication experience. Because communication is an experience that transcends different devices, subscribers are looking, without really knowing it, for a cross-platform messaging service, available on most connected mobile and wired platforms. There is, therefore, a need for a service that is easy to use and facilitates continuity of use between multiple different connected devices. For example, Beluga (Facebook) has tried to solve this new paradigm by proposing Beluga Pods on mobile native platforms and webapps. The Beluga team has been integrated into the Facebook Messages team and is supposed to cover the interoperability of “old” Facebook messages, the SMS world, emails and instant messaging. It’s a great plan, but it’s not here yet…

ProcessOne has the solution already, with its TextOne solution. First of all, there are IP-based apps for most platforms: iPhone and iPad soon; Android phones; and Pre and TouchPad WebOS (due for launch in July 2011) – all of which are available on their respective retail digital stores for free. Second of all, the issue regarding the network effect is bypassed with the extensiveness of the platform. Based on its core expertise, ProcessOne has built a new XMPP-based group messaging protocol, the TextOne Protocol, and a platform scalable and extensive enough to cope with high user numbers and other communication channels. This platform enables federation with any email networks or any instant messaging communities and SMS worlds via a gateway. TextOne simplifies and aggregates all these messaging services in one single communication mix experience. Soon TextOne will also deliver a multi-device approach (i.e. you start a conversation on mobile, continue on tablet, and end on a computer browser or even a connected TV…) and many more interesting platform features. The business model is based not on the app itself, but on the platform and APIs.

As Mickaël Rémond, CEO of ProcessOne, has already written in a previous blogpost, “iMessage is evil?”, our goal is now to gather industrial partners and smaller companies that are using group messaging to demonstrate the power of a federated network by the Autumn2011. Twenty years ago in Europe, SMS went mainstream when all the GSM-based carriers decided to federate their networks. The same needs to happen with group messaging.

Investors, handset vendors, pure players and web giants are investing a lot this year, but the industry still lacks the federation that is so vital for the success of group messaging. ProcessOne is showing the way forwards for the industry as a whole.

Here is an example:

Send an email, with a photo attachment, to many TextOne users

Receive a TextOne push notification

Open the TextOne groupmessage with inline photo

View photo