More than 2.3 trillion mobile messages will be sent worldwide in 2008, an increase of almost 20 per cent from last year''s 1.9 trillion messages, said Gartner. The research house also predicts that revenue in mobile messaging across major markets will rise over 15 per cent next year to $60.2 billion, up from $52 billion in 2007.

Even though traffic volumes in mobile messaging continue to rise, operator margins are becoming progressively thinner due to increasing competition and market saturation, says Gartner. The compound annual growth rate (CAGR) for short message service (SMS) revenue from 2002-2006 was approximately 30 per cent but Gartner forecasts 2007-2011 CAGR for SMS revenue to be a mere 10 per cent.

"In many markets, there has been strong pressure on operator margins for text messaging services and this has been driven by often intense competition between carriers," said Nick Ingelbrecht, research director for Gartner.  "At the same time, consumers have grown accustomed to large or unlimited bundles of inclusive SMS as part of their basic cellular service package. Carriers should plan for a future of much reduced margins on messaging services. They should develop messaging platforms, services portfolios and pricing plans that support the broader objectives of customer acquisition and retention, rather than short-term margin enhancements," Ingelbrecht continued.

The new research also shows that Japan and the Asia/Pacific region are the biggest consumers of mobile messaging, with a forecast of 1.7 trillion messages to be sent in 2008.

In North America, Gartner estimates 301 billion mobile messages will be sent in 2008, up from 189 billion last year. "The [North American] market is being driven by increased penetration of users, more frequent usage of peer-to-peer messaging, and unlimited and bucketed messaging plans," said Tole Hart, research director at Gartner.

Mobile messaging usage has increased in all Western European countries, and the growth in the number of messages sent is projected to reach 215 billion in 2008, states Gartner. "However, due to competitive price cutting, an expected increase in international charging regulations and more unlimited bundles, the revenue generated from peer-to-peer messaging is tending to flatten and is even showing some decline from 2007 (this trend is affected by exchange rate variations)," said Stephanie Pittet, principal research analyst at Gartner.

The new report predicts that volumes of short messages and picture messages will increase, but growth rates will slow in line with the saturation of mobile connections. Interestingly, the study also claims that photo messaging will halt in the next couple of years, as more subscribers will look to mobile communities and social networking sites to share images rather than sending them directly to one another.

The study also adds that in order to sustain growth over the next couple years, operators should look to work with established social-networking applications to drive traffic, said Mr. Ingelbrecht. "Mobile search and advertising also offer attractive potential drivers for SMS traffic, although most carriers appear poorly placed to support the end-to-end campaign management and reporting requirements of media buyers and advertisers."