Why We Don't Get the (Text) Message
Texting is insanely popular overseas, but practically nonexistent in the United States - for now. That just means we'll have to import the best tech from abroad.
By Paul Kedrosky, Business 2.0 Magazine

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Consider this anomaly: Ecuador, with a per capita GDP of $4,300, has the United States beat when it comes to a critical wireless technology. Americans may be 10 times as wealthy, but Ecuadorians send four times as many text messages.

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Text messaging - or SMS, as it's more commonly known overseas - is evolving beyond simple communication into a delivery mechanism for content and a mobile interface to the wired world. But if you want to get a taste for this revolution, you'll have to head abroad.

The opportunities start with understanding economic and cultural factors that drive usage. Pay-as-you-go cell-phone plans offered abroad encourage text-message use, as does the fact that in most countries, fewer people own PCs on which to send instant messages and e-mail.

But that doesn't fully explain why users in Ecuador and the Philippines send north of 200 SMS messages a month and the Danes and Irish average 100 a month, while Americans manage to tap out fewer than 50.

Why the difference? In part, it's simply a matter of critical mass, with people adopting SMS because their friends are using it. Look at how fast AIM took off in the 1990s, or MySpace during the past year. When texting gets big in the United States, it will become a mass phenomenon before we know what's hit us.

There's still hope for SMS

So American entrepreneurs shouldn't give up on SMS quite yet. U.S. consumers have proven that they do eventually adopt wireless technologies pioneered abroad, like camera phones.

The right way to think about text messaging for now is to bring successful SMS services tested elsewhere to the United States. Google (Charts) gets this - which is why it's basing much of its wireless development in London, not Mountain View.

What kinds of services succeed overseas? The bulk of SMS traffic is simple messaging between friends, which doesn't present many opportunities for entrepreneurs. But advertising and interactive applications beckon.

Think American Idol-style text-message voting on steroids. For example, in cell-phone-swamped Finland, there are popular TV programs where you can send texts that scroll onto the screen in a live chat, and others where you direct a character via SMS.

While SMS-driven TV programs may not thrive to the same degree in the United States, we could well see texting in live sports. Exponentia, a startup in Vancouver, British Columbia, has a service that allows Canadians to predict the next play by SMS in everything from golf to hockey.

And in the land of malls, the advent of commerce by text message is a given. U.K. retailer HMV is launching a service that lets customers buy CDs and DVDs by texting a message to a number found in newspaper ads. In Thailand this spring, Pepsi ran a World Cup promotion with text-message codes found under soda bottle caps.

Some skeptics think the overseas ardor for SMS is a quirk, somehow tied to a foreign nuttiness for cell phones, but they're wrong. Instead, it's a leading indicator of what will happen in the United States. Rather than substituting for PC-based communication, as it does in poorer countries, mobile messaging Stateside will untether commerce, social networks, and other applications originally tied to PCs. When smart innovators translate services originated abroad to America's cell phones, we'll really get the message.

Paul Kedrosky is the executive director of the William J. von Liebig Center for Entrepreneurism and Technology Advancement at the University of California at San Diego and a VC with Canadian firm Ventures West

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.