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Does iMessage automatically determine if the receiver is on an iOS device and then send your SMS without using your phone plan? Or do you have to know beforehand and then use a different app/route for your message?

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Automatically. It also lets you know what method is used so you can monitor your SMS usage somewhat.

iMessage is built into the Messages app. http://www.apple.com/ios/ios5/features.html#imessage

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