Telephony and SMS gateway provider Nexmo looks to Japanese market

Telephony and SMS gateway provider Nexmo looks to Japanese market

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nexmo_logoSee the original story in Japanese.

Integration of telephony or SMS with web services can be used for many purposes, like Google’s 2-step verification for its various apps, or user authentication for OTT (over-the-top) services like messaging apps, or for calling engineers for live server monitoring.

For web service providers, such integration is typically made possible not by in-house systems but by using third-party telephony/SMS gateway services. The world’s three major players in this space are Twilio, Nexmo, and Tropo. Mr. Woo Kim, the head of Asia Pacific operations at Nexmo, was visiting Tokyo this week, speaking about how the company plans to extend its business to the Japanese market. Nexmo provides an SMS gateway to the Line messaging app for user authentication, and NHN Investment has invested in the company. Kim is a venture partner at NHN Investment as well as an employee at Nexmo.

Can you tell us a little about Nexmo?

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Nexmo’s Woo Kim

Nexmo was founded in London’s Silicon Roundabout two and a half years ago. We’re headquartered in London, with an office in San Francisco as well. Our services are web-to-phone and web-to-SMS, and to date our customers include messaging apps like Line, Kakao Talk, WeChat, and Viber. When these apps authenticate their users, messages are transmitted using our service.

You’re making progress in the Asian market. How important is this region for Nexmo?

Yes. As I mentioned before, we’re providing SMS gateway services for messaging apps, and they are on the rise in the Asian market. That’s why I believe there are market opportunities here. In fact, we get 60% of our entire revenue, or 50% of our profit, from the region.

There are several gateway providers in this space. How do you differentiate?

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For our product, the most significant differentiation is high quality service. There are multiple routes to transmit an SMS message from one person to another. For instance, when delivering your message from our system to a mobile user subscribing to Indonesia’s Telekomsel, we have seven routes. The SMS scheme typically can’t guarantee to get your message to your recipient. That’s why we select the most reliable one out of the seven available routes to be sure your message is delivered.

In this process, our system monitors connectivity with each telecom carrier all the time using SS7, or Signalling System No. 7. Based on the performance history, the system chooses the best route for delivery by using a different criteria.

Besides e-mail, an SMS message is mission critical since it’s also used for the user authentication process. We have acquired much experience by working with the Line app. And this encourages other messaging app players in Asia to adopt our service for their user authentication needs.

Some web services using other gateway providers have switched to Nexmo. Why is that?

Well, our pricing is probably also one of their reasons, but I believe the main reason is our high deliverability rate, backed by our unique routing technique, as mentioned, and also our efforts to establish direct links with many carriers to reducing transmission relays and network hops.

How do you plan to expand your business in the Japanese market?

It was just six months ago when I took up this post. We just started exploring the market, and finding potential partners from web service companies and startups. We’ll be doing our best to work on many projects with Japanese companies.

During the last few years, OTT services are very hot regardless of location. The rise of such services are causing telcos to strain under the data demands, but it makes new business opportunities for telephony and SMS gateway providers.