One of the online free SMS services in India, Way2SMS.com has recently claimed to have crossed the 5 million mark in user registrations. This comes close to two years and seven months since the website was first operational. In a statement, VV Raju, the founder and CEO of the website says, “Recording five million subscriptions is phenomenal success for any web portal. Only few online players have achieved it but we are the first free SMS provider to make it. Way2SMS has become part of millions of lives by carrying their emotions and feelings. We will continue to live up to the expectations of our users who have faith in way2sms to communicate with their near and dear.”
Free SMS is a competitive business since it involves a lot of upfront capital that is required to purchase SMS inventory from the network operators, and monetization is a tough challenge. In India, this area is majorly dominated by only two players 160by2.com and Way2SMS
I have passionately followed the competition among the two players over the past few months (Disclosure: I formerly worked with 160by2.com) and it is interesting to see how the two players have grown from almost a similar base since 2007. Both these players started out as offering ad-supported free SMS service whereby users can send free SMS of around 80 characters long which is tagged with contextual advertisements.
Business Model Change
However, business models have changed since then. While 160by2.com has stuck to the core business of SMS advertising and has been expanding to offer International free SMS (the service currently allows users to send free SMS to and from 7 countries in the Middle East and South East Asia), Way2SMS has focused on offering lengthier SMSes (140 characters versus 80 characters from 160by2.com). The company has moved from core SMS advertising to monetizing off the Internet traffic.
Which of the two strategies – free International SMS of 80 characters against lengthier 140 character SMS, will pay off can only be seen with time. However, it is an exciting competition in this market and the users are surely to benefit from either over the long run.