Whatsapp needed to get acquired

February 25, 2014 § Leave a comment

In all the talk about Mark Zuckerberg’s plans for world domination, it’s perhaps missed that it had become vital that Whatsapp look to become part of Facebook. Or at least by a company with technological stature of Facebook. Which is really a rather small set.

The reason Whatsapp was such a success is because of its simplicity, word-of-mouth marketing, and largely under the radar growth. Not many had noticed its phenomenal size. Well, except for the telecom companies. With the rise of apps/services such as Whatsapp, Viber, iMessage, an important revenue source was under threat for the telcos. Viber was among the apps looking at disrupting the core feature of mobile telephony, calling.

Let’s look at Whatsapp’s announcement of introducing voice call feature. It is clearly something they have been working on for quite some time. They have graduated from no audio, to sending audio clips to push-to-talk feature in their last major update. And as they go for the ultimate push, they realise that they are going to face the mighty telecom companies head-on. They look at other players which are in the similar service areas: Skype faced cases where telcos were purposely blocking it, and went for Microsoft protection. WeChat is part of a $7billion Chinese group with significant presence in media, entertainment and telecommunications. iMessage is Apple’s child. Viber got acquired by Rakuten which owns the largest e-commerce platform Japan. Clearly Whatsapp needed “blessings” of major technology/telecom player to make that next leap.

Now let’s take a gander at Facebook’s influence in the telecom world. From WSJ at the side of Mobile World Congress:

Mr. Zuckerberg’s comments underscore his company’s complicated relationship with the room he was addressing. Telecommunications executives on one hand appreciate how Facebook drives people to subscribe to Internet service on home and on mobile phones—giving Mr. Zuckerberg top billing at their biggest conference.

But telecom chiefs—who also pride themselves on reaching billions—chafe at how Silicon Valley companies like Facebook capture much of the value of the Internet. Facebook’s $175 billion market capitalization dwarfs that of almost every telecommunication firm.

So, as part of Facebook Whatsapp is now under protection in adding new services such as voice, and perhaps eventually video calls. Of course, being with Facebook would mean that potential monetisation will be greatly enhanced. But Whatsapp had perhaps reached a point in its life where it needed to worry about it long term survival rather than growth and revenue.

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