I really tend to think that Allo wasn't designed for markets where SMS is prevalent, but rather, in markets (like India) where WhatsApp is the big thing. That's the market Allo is really competing for. In regions where SMS is widely used, Allo probably won't make much traction at all in messaging.
Google is pushing Google Assistant these days. And Google Assistant -- like all things Google -- is all about collecting just exactly what you are doing -- email (gmail), browsing (chrome and search), and now messaging. Google is limited on just how they can "collect" data via SMS, so they are pushing Allo so that they can them incorporate what one is "messaging" so that they can they improve Assistant. What is left unsaid of course, is that my monitoring your chats via Allo, they can also use that for their advertising purposes which is of course Google's bread and butter.
Google hopes that the future of messaging and phone calls is not through the telephone network -- but through the internet. Thus Duo and Allo. Whose main competition at this point is Skype, Facetime, Facebook Messenger, Whatsapp, etc.
Interesting play if you ask me. And this is in some respects why Google and Facebook are taking "moonshots" at providing internet connectivity to the undeveloped world.
The goal of Facebook, Google, and to a lesser extent Microsoft is to transition users from the telcos to the internet.