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Health & Fitness

Why the Facebook Acquisition of WhatsApp?

Evan Andriopoulos's profile picture
Evan Andriopoulos, Neighbor

The mega acquisition of WhatsApp a brilliant company that uses the internet for sending messages, by Facebook for $16b has raised some questions as to why, what and why so much?

The answers lie within how WhatsApp is run. With 1 engineer for every 14 million active users WhatsApp is a lean mean fighting machine. WhatsApp has 450 million active users sending 50 billion messages a day, yes a day via their low latency system supported by a skeleton crew. It has to be good to allow so few hands in on the "technical" pot making sure it works well and does not require a large number of support technicians. 99,9% up time which surpasses most traditional phone carriers service!

WhatsApp has delivered disruptive technology by knocking down the doors built by the traditional carriers. Change always comes from the outside.  WhatsApp has focused on a simple model - lightning fast messaging services. No bells, whistles etc… 

Founder Brian Acton has his three simple rules:

  1. NO ADS
  2. NO GAMES
  3. NO GIMMICKS
It will be interesting to see how this plays out as Facebook lives off its revenue from advertising, farming information, selling it, tailor made ads and more. I believe there will be some flexibility here at least in the interim. Perhaps over time either:
  1. WhatsApp charges a nominal amount per user per month or year eg. $1.00 per user per year = $450m via today´s critical mass of customers and this will grow with access to Facebook and its 1 billion and growing users….This would save the average user of traditional phone services more than $100.00 a year on data plans alone!
  2. WhatsApp succumbs to the dollars and allows advertisers to hammer away at the customers. Leaving some major churn however by exposing WhatsApp to millions and millions of new customer prospects this may be a wash or even go on the plus side for WhatsApp/Facebook.
  3. Or a combination of both…
I see both models or even a combination (3) as the way forward. It is about generating little dollars from lots of people which is quite different than many technology businesses no money from lots of people or lots of money from few people. 

What will Facebook do with WhatsApp?

A good question…Instagram flourished when it was purchased by Facebook for roughly $48 per user vs $42 per WhatsApp user. WhatsApp´s future development will fit well into the overall strategy of Facebook. Looking to add messaging services that are well "sexier" than those currently available by Facebook. WhatsApp is just starting its greatest adventure yet. Now Facebook entires the disruptive  "dial tone" business that WhatsApp helped create. A true marvel for a still young and developing company. What is next…? not sure but the ride looks to be very exciting!

Other companies to keep an eye on are Whisper (http://whisper.sh) a messaging service that focuses on a younger demographic and one that uses background pictures to help express ones feelings. Easymeeting.net (www.easymeeting.net) a video conferencing via the cloud service that focuses on easy to use video conferencing via your device of your choice, the dial tone of the video communications business as well as Tesla (http://www.teslamotors.com) an automobile manufacturer designed by technology executives and their soon to come partnership with Apple.  

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