skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.
Global Search Configuration

Straight Talk Telecoms

Ovum view

Microsoft’s offer this week to acquire business social network LinkedIn for $26bn highlights the continued importance of communication platforms in the digital age – as well as the challenges they face. As we describe in our report Digital Economy 2025: The Future of Communications, enabling communication will remain fundamental to the digital service provider (DSP) role, but earning money directly from communications services will continue to be a challenge over the coming decade. This does not necessarily undermine the value of Microsoft’s LinkedIn deal.

Ovum research reveals that over the next 10 years the human need to communicate will remain as strong as ever. By 2025 total communication traffic will be the equivalent of 68.5 trillion minutes across all modes of communication. This means 23 minutes spent communicating digitally per day per every person on the planet, an enormous achievement in technological progress and availability given that the first cellular networks launched 35 years ago and that the first commercial SMS service appeared just over 20 years ago.

Studying the growth in cellular telephony and SMS highlights how communication has changed over a relatively short time – and how things will continue to evolve. Growth in text-based communications is set to be far greater than in traditional, cellular, and circuit-switched wireline voice. The social networking and messaging functionality of LinkedIn is clearly the way forward. According to Ovum forecasts, non-voice communications will account for 69% of all communication in 2025 (up from 48% in 2015). Within this shift, we will see instant messaging and email dominating, at the expense of SMS. Nonetheless, voice will remain an important mode of communication, particularly with the addition of video, with 21.7 trillion minutes forecast for 2025 (up from 15.9 trillion in 2015).

The converged platform will become a necessity in the communications space over the next 10 years. Users will demand intuitive, rich, integrated communications, with platforms automatically selecting the most appropriate mode based on time, place, and context. DSPs will compete to provide the converged platform through which customers communicate, partly because controlling such a platform will give DSPs “ownership” of the identity users share when introducing themselves (in the same way people today share a mobile number) and create stickiness to the platform. In this sense, LinkedIn is clearly a useful addition to Microsoft’s portfolio of business communication assets. In the longer term, such evolution could even threaten the role of the phone number as an identifier – a major disruptor for traditional communication service providers (CSPs).

In the report Digital Economy 2025: The Future of Communications we describe how revenues will not keep pace with the appetite to communicate. Traditional CSP-delivered service revenues are forecast to fall at a CAGR of 4.4% between 2015 and 2025. These services will still be worth $537bn in 2025, but it is clear that for all the demand, users are actively seeking cheaper – or free – communication options. Consequently, IP communications will be essential for cost efficiency as well as for enabling richer communications experiences.

Monetizing LinkedIn will be Microsoft’s greatest challenge. LinkedIn’s revenues have grown predominantly through its use as a recruitment tool, but so have its costs, resulting in widening losses. Its share price has fallen by more than 40% so far in 2016. But this does not make Microsoft’s decision a poor one. With the battle to control the key digital platforms and ecosystems in the Second Digital Revolution, the extension of capability and audience reach will increasingly become a determinant of success. Microsoft will look to enhance the capabilities of the world’s largest business network through its other assets, creating a dominant position in the future business space. Understanding the future of communications will be vital for supremacy in the platform-centric world of 2025, even if the days of paying for minutes and texts prove to be a thing of the past.

Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.

Recommended Articles

  • Service Provider Markets, Consumer & Entertainment Services,...

    MWC 2018 Highlights

    By Ronan De Renesse 27 Feb 2018

    Over 20 of our senior Ovum analysts and consultants attended this year’s Mobile World Congress in Barcelona at the end of February. In between meetings, briefings and presentations, our analyst team were blogging and tweeting about key developments, trends and rumors. Have a look through our daily MWC 2018 Highlights to find out what happened.

    Topics 5G AI IoT Cloud Payments SDN/NFV Smart home

  • Internet of Things

    IoT Viewpoints 2018

    IoT Viewpoints explore the IoT opportunity in 2018 and beyond. Download our latest e-book to get our newest collection of thought leadership articles on the emerging IoT trends, technologies and opportunities.

    Topics IoT

  • Consumer & Entertainment Services

    US pay TV: Is it facing an existential threat?

    By Adam Thomas 28 Mar 2018

    With US pay TV having endured the worst year in its history, thoughts have inevitably turned to the future. The likelihood remains that the immediate future will remain highly uncomfortable for everyone except the scaled multinational digital platforms.

;

Have any questions? Speak to a Specialist

Europe, Middle East & Africa team - +44 (0) 207 017 7700


Asia-Pacific team - +61 (0)3 960 16700

US team - +1 646 957 8878

+44 (0) 207 551 9047 - Operational from 09.00 - 17.00 UK time

You can also contact your named/allocated Client Services Executive using their direct dial.
PR enquiries - Call us at +44 788 597 5160 or email us at pr@ovum.com

Contact marketing - 
marketingdepartment@ovum.com

Already an Ovum client? Login to the Knowledge Center now