iMessage may help you choose a carrier, save money

iMessage is Apple's new text message app that could reduce your text message bill to $0.00 - something you may want to think about before signing a new two-year cellphone contract.

Robert Galbraith/Reuters
iMessage announcement at Apple event: Apple Chief Executive Officer Tim Cook speaks in front of an image of the iPhone 4S at Apple headquarters in Cupertino, California, October 4. The new IOS 5 includes iMessage, which offers a new way to send text messages ... for free.

Apple's IOS 5 release had iPhone, iPad, and iPod Touch owners clamoring to download the free software Wednesday. Unlike the IOS 4.2, which was panned as being overhyped, users are raving about the IOS 5.

With over 200 discrete new features, the latest iDevice OS feels like a significant upgrade.

Many features are grabbing the limelight but one of them might also save you money.

With iMessage, users can continue to send and receive text messages and multimedia messages just as they did with the the old Messages app. What's new is how smart the app is.

If a message is being sent from one iPhone to another, iMessage intuits that the second device has iMessage and sends the SMS to the other user through Apple's servers, thereby bypassing the cellular carrier. Apple does not charge for the use of iMessage, so prospective iPhone buyers may want to consider doing without the unlimited text message plans that AT&T and Verizon offer. (All Sprint’s plans include unlimited free texts).

In particular, this may help some users get off the fence about AT&T's $54.99 plan, which is the cheapest but can get expensive quickly given its $0.20 per text message fee.

But the new app isn’t leaving other iDevice users high and dry. iMessage also works with the iPad and iPod Touch, so you don't have to have an iPhone to take advantage of the free messaging. Since iPads and iPods don't have phone numbers, iMessage requires an initial setup using an email address instead.

And unlike traditional text messaging, iMessage keeps the information coming even between texts. Like other chat programs, iMessage tells you when the other person is typing. It also lets you know the status of your sent message so you don't have to wonder if the message has been delayed (ahem, BlackBerry).

Apple sends message to carriers

While iPhone customers are reaping the benefits of iMessage, cellular carriers stand to lose billions. Carriers have been strong advocates of text messaging because it produces the biggest profit margins. Each text message costs carriers a fraction of a cent but they charge much, much more. Text messaging provided $21 billion in revenue for the industry in 2010, and represents 12 percent of Verizon's total revenue.

So is Apple trying to nudge market share out of carriers' firm grasp? Probably not. Instead, this move is most likely all about Apple creating barriers to keep customers hooked.

But customers don’t seem to be fighting it. BlackBerry customers have long been fans of a similar BlackBerry product called BlackBerry Messenger, and analysts say that if Apple’s iMessage does well, other companies like Microsoft may follow suit.

So does this spell the beginning of the end for high text message fees? Share your thoughts in the comments section below.

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