Application-to-Person (A2P) SMS and API Market: Recent Industry Developments and Growth Strategies Adopted by Players

In the fairly consolidated global application-to-person (A2P) SMS and application program interface (API) market, the top five vendors, including Twilio Inc., Syniverse Technology, and CLX Communications accounted for well over half of the overall A2P SMS and API market revenues in 2017. Owing to the lucrative growth that the market currently offers, many new vendors are entering the fray with their A2P SMS APIs at a continuous pace. The rising number of vendors in the market is expected to intensify competition in the market in the next few years.

In the intensely competitive market, releasing APIs as open source applications is among one of the most evident strategies among key vendors. Leading companies in the market, including Syniverse Technologies, Nexmo Inc., and Twilio Inc., have followed the trend in the past years with an aim of reaching out to a larger developer base across the globe. Moreover, so as to develop loyalty among developers about their products, A2P SMS and API providers are also following the course of offering technical support for resolving technical glitches that may occur while integrating the APIs in any app at no extra cost.

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Rising Popularity of Two-factor Authentication (2FA) and Mobile Marketing Stimulate Market Growth

The rising discontent surrounding the conventional ways of ensuring security of crucial consumer data during online transactions has paved way for the two factor authentication (2FA). Owing to the provision of an extra layer of security and authentication to the consumers, 2FA is gradually becoming the first choice for enterprises across the world. As per a 2015 report published by The Dialogue Group, a leading company operating in the field of A2P SMS traffic monetization software and services, 2FA will become the most preferred security validator for online transactions in the next few years.

The rising preference to 2FA is expected to substantially boost the A2P SMS and API market. Along with this, the increasing usage of A2P SMS for mobile marketing is also expected to drive the A2P SMS and API market in the near future. The rising global population of mobile users is allowing several industries to reach out to a larger base of potential consumers through A2P SMSs.

Concerns Regarding Security Risks and Less Message Visibility to Restrain Market’s Growth

In the past few years, communication lines of mobile network operators (MNOs) have become highly vulnerable to security breaches owing to the lack of effective security tools. According to an article published on ITProPortal.com in 2016, most MNOs across the globe still use firewalls that were installed before 2012, which are unable to provide the necessary visibility required to detect and ward off gray routes and other security threats. The website also suggest that gray routes hold over 2/3rd of A2P SMS traffic across the globe, which essentially highlights the fact that 1/3rd of A2P traffic can be monetized by MNOs. Illicit traffic and security risks are expected to have a substantial impact on the overall profitability of A2P SMS and API market in the next few years.

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Nevertheless, the market is expected to expand at a favorable pace over the next few years globally. Transparency Market Research analysts state that the A2P SMS API market will exhibit a healthy 4.1% CAGR from 2017 through 2024. At this pace, the market will rise from a valuation of US$186.0 million in 2017 to US$245.9 million by 2024. The global market for A2P SMS, which was valued at US$41.5 billion in 2017, is expected to exhibit a 4.9% CAGR and rise to US$58.01 billion by 2024. In terms of end users, the segment of bulk SMS providers led with over 34.1% share in the revenues of the global market in 2017. Technology-wise, the segment of traditional API led, accounting for over 55.3% share in the global market’s revenues in the same year.