It must be nice to have billions of dollars to throw around. That’s just what Facebook has done, announcing today the purchase of WhatsApp Inc (and its eponymous cross-platform messaging app) for a cool $US 19 billion in cash and stock. That sounds like a lot, and it is: contrast with Facebook’s acquisition of Instagram for just $US 1 billion not all that long ago, and you can see very quickly that Facebook wanted WhatsApp bad.
Why? WhatsApp claims to have around 450 million regular users which Facebook, as part of the acquisition, can now count amongst its own. WhatsApp will, however, remain a separate app, with no (or only minimal) Facebook integration at this stage. Many WhatsApp users are probably already Facebook users, so this probably doesn’t mean an injection of some 450 million new users for Facebook, but it’s quite the acquisition nonetheless.
WhatsApp is without doubt one of the more popular cross-platform messaging tools, founded by two Yahoo engineers and developed in Russia where programmers cost less than they do elsewhere. This has allowed WhatsApp to remain ad-free, with a free year of service and then $0.99c per year afterward for those continuing to use the service.
WhatsApp was introduced when text messaging remained quite expensive (whereas most phone plans in Australia now include SMS free), but it does so much more — sharing images, videos, voice recordings and the like make WhatsApp messages just a little bit more useful than SMS / MMS, and doing it for free using data networks instead of cellular (as is the case with SMS) meant that users could avoid unnecessary fees. Increasing the ease of adoption was the ability to access the service with your mobile phone number as your identifier, removing the need for yet another user ID or account setup.
That’s a nice $19 billion pay day for WhatsApp and its employees. Well done.
Editorial:
$US 19 billion is an awful lot of money for Facebook to splash on WhatsApp, and it does lead to the question of what exactly will become of WhatsApp and how (if?) it will be integrated into Facebook’s existing product mix. Facebook users will know that cross-platform instant messaging is already a part of the Facebook platform, but perhaps it’s not quite as popular (or well executed) as WhatsApp’s platform.
It is also possible that Facebook takes the alternate view, that Facebook Messenger provides a much better platform than WhatsApp and it may choose in future to merge the two ecosystems into one intermingled suite. We can certainly see some logic in Facebook going down this path, but it would need to tread carefully to avoid alienating WhatsApp’s existing users, particularly bearing in mind that they may not necessarily be Facebook users already.
It’s quite likely we won’t see any major changes for a while yet, but rest assured, things will change down the track, just as they did with Instagram. Admittedly, the changes there haven’t been momentous, but they occurred nonetheless.
*uninstalls whatsapp*
Idiot.
Lmb dh.
Whilst I agree this is a smart purchase for FB, it’s the price that trips me up. $19B is insane!
It’s like the 2001 Stock Market Tech Crunch where people were paying crazy prices that were not justified by the profitability of the companies. Even if all the users paid $1 a year (which presumably, not everyone will), that’s still a pretty lousy ROI unless they can ramp up the user count significantly.
Exactly, HP paid about that for Compaq and that was said to be too high. You are so correct re the bubble. This is very dangerous, thank god it was mostly FB stock, way over rated so mostly paper money. Still they have the real estate crash and now we are looking at a tech stock crash… fun times indeed with our country looking at an Abbott recession.
An Abbott recession? Are you serious? What are you basing that on?
The number of small companies that will go to the wall because the Majors are jumping ship, so double whammy jump up for unemployment. That will result in a drop in business confidence.
Say hello to the recession we did not have to have.
Abbott’s promises, which it really appears should be taken with a grain of salt based on current achievement (failure). If we are lucky his failure to execute his promises may keep us out of recession long enough for Labor to regain power next election.