No - consumers will save $54 billion by 2016. They'll then spend those savings on other things.
It's a good thing.
But I'm afraid it's not the only industry about to get absolutely crushed by progress. This story reminds me of the time Steve Jurvetson (a VC of DFJ fame) discussed the amusing interactions he had with a large engine oil company.
He clearly illustrated to them them how, and why, their synthetic engine oil business ($10 billion a year) was about to get absolutely decimated by the introduction of essentially maintenance-free electric vehicles. He then told them that they had better diversify their synthetic oil cash cow, before electric vehicles came in and ate them for breakfast.
Did they bother heading his warning? No. Instead, they laughed in his face.
Everyone that services cars is next on this list - outside of brake pads and body panel beaters.
I wonder how long it will be before there's an article that states: "World to lose $15 trillion as AI and automation replace most humans."
> I wonder how long it will be before there's an article that states: "World to lose $15 trillion as AI and automation replace most humans."
Not very long.
We are way pass the points on a bell-shaped curve were an increase in efficiency (due to technological progress, and accumulation of knowledge) produces an increase in overall job numbers.
We are now somewhere over the hump, and are at a point were for every job efficiency creates, it removes 2-5 overall jobs.
But that's a positive thing. Full employment in 1857 meant everyone from the age of 13 working 60 hours a week in rough conditions. Now full employment means everyone over 21 working 48 hours a week in a safe environment. In 30 years it will mean people between 21 and 35 working 20 hours a week at home. That's progress.
Assuming the system keeps up. Right now it is nearly impossible for many of us to work part-time without taking a huge hourly rate cut. You can (sometimes) work as a contractor/consultant, but then the tax and healthcare systems are stacked against you.
I personally think it is insane that we still work 40 hours per week today. Many people seem to deal with the ridiculous situation by wasting time at work (e.g. surfing Reddit for half the day). This is bad for the bottom line and, more importantly (because the effect is broader), bad for employee-morale.
I think part of the problem is that many in our society (talking about the US here) equate hours with "work". If you don't put in the time, you must not have done the work. And if you do the work in less time, you should just do more work (even when that doesn't make sense).
This jives with the message we keep hearing from the political class. That we have had things too good and that we just can't afford for everyone to have such "lavish" lifestyles any more. They seem to think things need to move in the opposite direction, more people working longer for less compensation.
I strongly disagree. But then, I am much more concerned with the quality and general happiness of my life overall than I am with how many widgets I create or consume.
Despite hundreds of years of technological innovations, rapid changes in industries, and fluctuating populations, the unemployment rate bounces between 3 and 20 percent (usually 5 to 10). We had 3 million some people in this country in 1790. We now have over 300 million. That same span saw the introduction of technology which DESTROYED the agricultural livelihood most people relied on. Meanwhile, the colonial american would have to compete against 100 times as many applicants today as he would have back then. So why aren't we all unemployed? Why do so many different decades, with wildly different technological and demographic situations, always face roughly the same unemployment rates?
Because employment faces feedback forces on both ends of the employment spectrum.
When people are idle, they want to do something, so they create ways to be useful to others in exchange for things. In today's America, people will bring hot pizza to your door in minutes.
Such an enterprise would have cost an unimaginable fortune in 1790 (you would have had to invent a network of roads... and the automobile... and electricity).
But every invention that makes pizza delivery possible, roads and cars and electricity, threatened to destroy some other industry (horses, wax candles?). As the candlemaker was losing his industry, he couldn't even envision the role of a pizza delivery driver. It makes no sense in his world. So of course, to him, everything looks dire.
You might think that we've never seen technological shifts as potent as today, that somehow this time it's different. But that ignores history. The overnight displacement of all industrial manufacturing by robots would be a blip compared to the decimation of agricultural labor over the last century plus. The economy is far more diversified now, and even within the sector, a smaller percentage of jobs would be lost. We survived the productivity boom in agriculture just fine. (Maybe with a little obesity to show for it.)
We freed up people to staff the front offices of advertisers and entertainment companies and to bring food to our doorstep.
Please give me an example where a modern day industry collapses, or is reduced by progress (such as automation), or by a new industry emerging ... and every job lost being replaced by another gainful-employment type job opportunity? Not in 1790, but in 1970-now.
And I don't mean were other industries absorb the unemployed, because they eventually fill up, and later on collapse themselves for various reasons, mostly more efficiency spelling less jobs.
Millions of auto-workers delivering hot pizzas? That's funny.
> We freed up people to staff the front offices of advertisers and entertainment companies and to bring food to our doorstep.
So is that.
At some point you tip over.
The job market (regardless of industry) always ends up reduced to a few specialists and many low paid automatons (people working in fast food for example, or the FoxConn workforce making iPads, etc) or machines ... relatively speaking.
*To counter my argument, I'll admit there is the internet and the printing press example; and all the jobs the internet has created. But is there enough new revolutions to offset the losses due to increasing efficiencies? I don't think so.
But it's hardly an exhaustive list. Neither was pizza delivery boy for new jobs. We also have oncologists, data scientists, app developers, and (modern) industrial engineers.
(If you want more, type into google "careers that didn't exist" and it will offer suggestions... 20, 10, even 5 years ago. simplyhired shows 72,000 "social media" jobs right now. Even though probably half of them are spam, it's thousands, for a phrase that we just made up a few years ago.)
In the 90s, manufacturing dropped like a rock, but overall, employment ticked up. So did median household income. The shift was primarily due to trade liberalization. The recent recession decimated jobs across many fields, as you'd expect from a drop of jobs due to flagging demand (driven by pressure towards deleveraging, not unexpected given high personal debt to GDP ratios).
So automation isn't displacing workers yet, other factors are. If the automation dystopia hasn't even begun, how do we know it's starting? We go on a hunch, and say technology will probably displace all jobs at some point in the future, maybe five years from now on no evidence, because it feels right?
Will new jobs and new sectors always replace the old? All of economic history suggests yes. Armchair speculation suggests no.
Go with whatever your gut tells you, and forgive me for opting for a more conservative reliance on metrics. Sometimes metrics are wrong, but that's where I hang my hat. I will have your back if we reach 35% unemployment in a few years (or ever). I hope you'll pledge to ditch linear economic forecasting if we hit sub-6% unemployment by 2017.
"Did they bother heading his warning? No. Instead, they laughed in his face."
The company that makes valvoline, Ashland Inc., seems to be at an all time high. It's going to be a long time before synthetic oil companies are not needed. I don't see tractor trailers, construction machinery, large trucks, etc. going electric for a very long time.
UK: sms messaging here provides me with a uniform and universal way of contacting any mobile phone owner who want to be contacted, e.g. students I need to tell about a classroom change.
I just use a Web service like bulksms. In the UK and I believe Europe, receiving an sms message does not cost the recipient any money. I don't have to track who uses facebook and who uses twitter, they don't have to 'follow' or 'like' some institutional account.
That was the point I was making but didn't communicate effectively. There are a lot of different alternatives. Most of these alternatives are not 'push' but depend on the recipient monitoring something.
In the Further Education college I teach in, 98% of students have a mobile phone. Many of those are basic pay as you go dumb phones. Some feature phones, Blackberry phones are popular in UK with teenagers. A few have iPhones and Samsung and the LG slabby things. Not all have Web access on the phone (or have it but don't want to turn it on).
A result that surprised me was that teenagers don't access the Web that much on laptops or desktops.
The common denominator here is sms. I get 98% access. It costs a little money, but not huge. I hope it does not go away as we have brand (phone, carrier) dependent messaging.
SMS is great and should not go away. Charging a non trivial amount per message is ridiculous. US carriers are the worst offenders on this. They charge up to 20c to the sender AND the recipient.
SMS isn't going away, if anything it'll get cheaper as it's forced to compete with messaging apps. But if it goes away, e-mail can easily replace it for your needs (especially since most students have e-mail capable phones).
Do people in the US tend to pay for individual text messages?
Almost everyone in the UK has an unlimited or close to unlimited texting plan (3000+ texts). Given that everyone's paying for it anyway, the actual revenue gained by someone sending a text is 0. In fact, because a text will use some tiny amount of infrastructure, they'll potentially lose more money the more texts people send.
Most people I know who use whatsapp use it more like an IM client for group messages rather than for one-to-one messaging. As everyone has more or less unlimited texting available to them, nobody uses whatsapp for financial reasons because there's no savings made.
This will only be an issue once people start to realise that they're not using as many texts and demand to pay less. I can't see that happening in the UK.
"Almost everyone" is basically almost everyone you know. It's difficult to find data on the market share of pay as you go plans in the UK but I'm sure it's a significant portion of the market. These plans typically charge for individual text messages unless you get a special plan or meet some criteria (e.g. top up at least £10 a month).
It's huge. The most recent OFCOM market report[1] reckons just over half of all mobile customers in the UK are on PAYGO. Don't under-estimate the UK pre-pay (PAYGO) market. It's quite easy to, because most people reading this are probably on contract themselves.
Not only is pre-pay half the market in the UK, it's by far the hardest to retain. Pre-pay customers aren't loyal (partly because they're not locked in to contracts, partly because they tend to be price conscious), and because they skew young they tend to be the customers more likely to both a) use SMS, and b) switch to things like WhatsApp.
I find that really surprising because phone service is now just so damn cheap in the UK. After a cashback offer, I'm effectively paying £5 a month for more minutes, texts and data than I can hope to consume. I guess my needs are relatively modest, but so (I imagine) are most non-business customers'.
Pay as you go plans also typically charge a fairly significant amount for mobile data too, though. In fact, on giffgaff (a PAYG-only operator which seems to be insanely popular with young people here in the UK), the most sensible way of paying for mobile data comes bundled with unlimited texts anyway.
The PR here is hiding the larger issue. It's not end-users that carriers need to worry about - as you say, most are on near unlimited texting plans, and it's rather unlikely monthly plans will drop in price.
No, the problem is the general rise of IP/push messaging across all sectors. Carriers do make significant amounts of money from direct connection billing and bulk SMS. As more brands develop mobile presences the need to contact customers through SMS versus alternative methods will decrease. Push messaging is considerably cheaper, and from the end user's perspective often less annoying and more convenient.
Fortunately (for the carriers), most operate globally, and certain developing markets offer vast SMS revenue potential, more than the West ever did. India alone is a massive user of SMS, considerably more so than the US (partly due to the lack of regulation: a lot of those SMS messages being sent in India are spam).
I could have an unlimited texting plan if I felt like paying an additional $20-30/month. As I did not feel like it, I used to avoid texting for the most part. Now that iMessage is available, I text freely with other iOS users, and still try to avoid texting for others.
The reason unlimited texting has come about her in the Netherlands seems to be Whatsapp and its friends - providers add an "unlimited texting" bundle to most plans to "remain competitive".
I'm afraid consumers won't pocket that $54 billion either as long as the carrier cartel maintain iron grip. Just look at what Verizon is doing. You can't even unbundle "unlimited text and talk" from their non-prepaid plans anymore. 1GB smartphone plan will set you back $90/month, which is only a deal if you fall under a small percentage that actually go over 500 minutes per month AND send thousands of SMS. Just keep buying ATT and Verizon stocks guys.
Exactly. The carriers still own the transport layer, so they'll just reshift their plans to cover the loss. Some carriers in the US have introduced these "shared data" plans which pretty much accomplish the task.
>Ovum highlights the rapid increase in the number of OTT (over-the-top) players, and demonstrates that social messaging is not a short-term trend, but a shift in communication patterns.
Who would have thought that SMS is not the future of communication.
I don't understand this sentiment. Good riddance to what, exactly? A simple and universal method of quick communication between literally every cellphone in the world?
Probably the rediculious fees for sending and receiving text messages. As a British person I can't believe the American networks charge to receive text messages.
Well its more bs than just getting charged for getting a text. You basically get 2 choices:
* pay per text (which is totally lame I agree)
* pay ~$20/mo for unlimited
Most people just opt for the latter because if you ever send more texts a month than $20 it "pays" off in the end.
Both options suck, the phone companies not being able to gouge for texts is no love lost in my opinion.
The third option is to cancel your text plan, which I have done. If my friends send me a text, it disappears into the ether (no error message). I'm trying to get folks used to contacting me through any other means (email, fb, g+, gchat, call me...maybe?).
The technology is poisoned by the insane fees for it and the business model itself. Paying per text, or pre-buying blocks of messages feels archaic, no?
A single SMS in the US can cost 40 cents, since both the sender and receiver will pay if they don't have bulk plans. Any message containing more than one SMS worth of information would be cheaper to send by first class mail, although the SMS does win for anything short enough to fit into one message.
Maybe there are costlier satellite data plans. A quick search of Iridium's plans revealed no prices, just resellers and offers of quotes, which indicates it may be really pricey.
Since i know about RCS and the aricle talks about it: It is mostly a pipe dream for operators, these services (file shharing, video calls, IM) already exist for much cheaper then what the telcos plan to charge.
This is all part of the IMS technologies that have not been taken up by the market for approx 7 years now...its a sad tale of too little, too late
It's a good thing.
But I'm afraid it's not the only industry about to get absolutely crushed by progress. This story reminds me of the time Steve Jurvetson (a VC of DFJ fame) discussed the amusing interactions he had with a large engine oil company.
He clearly illustrated to them them how, and why, their synthetic engine oil business ($10 billion a year) was about to get absolutely decimated by the introduction of essentially maintenance-free electric vehicles. He then told them that they had better diversify their synthetic oil cash cow, before electric vehicles came in and ate them for breakfast.
Did they bother heading his warning? No. Instead, they laughed in his face.
Everyone that services cars is next on this list - outside of brake pads and body panel beaters.
I wonder how long it will be before there's an article that states: "World to lose $15 trillion as AI and automation replace most humans."