Google Wants You to Hangout Instead of iMessage

Google  (NASDAQ: GOOGL  ) is rumored to be adding SMS functionality into its new Hangouts app, which is a unified messaging platform that consolidated all of Google's previously disparate offerings. Hangouts is now available on numerous platforms, but adding SMS texting support would allow it to tap into existing network effects. That would give it a much better chance of making a dent in messaging.

Seamless integration with phone numbers has allowed Apple's (NASDAQ: AAPL  ) iMessage to soar in adoption, since there is no effort required from the user's perspective. iOS devices automatically detect and send texts for free -- it just works. Apple says it now sends over 2 billion iMessages per day, which inevitably also chips away at carrier revenues.

Messaging has become an important battleground for the tech giants. BlackBerry once dreamed of making its BBM service the new standard in messaging, known as its "SMS 2.0" initiative, but it failed to take off. Facebook has its Messenger app, which has inherent network effects since Facebook is the largest social network on the planet.

In this segment of Tech Teardown, Erin Kennedy discusses mobile messaging with Evan Niu, CFA.

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