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Facebook Snags Mobile Messaging Service WhatsApp

Posted: February 20th, 2014 | Author: | Filed under: Business News, Facebook, Social Media, Social Network Sites | Tags: , , , , , , , , , | 1 Comment »

Facebook Snags Mobile Messaging Service WhatsAppThe social networking site that is Facebook, has announced it’s buying mobile messaging service WhatsApp in a deal worth $US19 billion, seriously expanding its mobile footprint. WhatsApp, a cross-platform mobile app that allows users to exchange text messages without having to pay carrier charges, has apparently been in discussions with Facebook for more than 12 months.

The deal bolsters the Facebook’s – currently populated with more than 1.2 billion members – mobile user base with the 450-million strong WhatsApp users.

The deal will see WhatsApp operated independently.

It’s Facebook’s biggest acquisition to date, coming less than two years after Mark Zuckerberg’s firm raised $16 billion in the record breaking public stock offer.

The WhatsApp deal includes $US12 billion in Facebook shares, $4 billion in cash and $3 billion in RSUs – Restricted Stock Units – for employee retention.

Facebook said via it’s blog the deal that “the deal supports Facebook and WhatsApp’s shared mission to bring more connectivity to the world. The combination will help accelerate growth and user engagement across both companies. “

Unlike Facebook, WhatsApp is a slim operation, with less than 35 engineers – 1 engineer to 14 million users – it processes 50 billion messages a day. The attraction runs much deeper than popularity, WhatsApp will not only boost Facebook’s international coverage, more importantly, it will add up to 350 million mobile users to Facebook’s mobile advertising offer ::::

Facebook reportedly sought to acquire another hot messaging firm, Snapchat, for $3 billion last year. In 2012 Facebook closed its deal for Instagram, worth some $1 billion at the time based on stock value.

“WhatsApp is on a path to connect one billion people. The services that reach that milestone are all incredibly valuable,” Mr Zuckerberg, Facebook’s founder and chief executive, said. “I’ve known WhatsApp founder, Jan Koum for a long time, and I’m excited to partner with him and his team to make the world more open and connected.”

Mr Koum, will join Facebook’s board under the deal.

“WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide,” Mr Koum said. “We’re excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world.”

In a blog post, Mr Koum said “Almost five years ago we started WhatsApp with a simple mission: building a cool product used globally by everybody. Nothing else mattered to us.”

The tie-up gives WhatsApp “the flexibility to grow and expand while giving me, [co-founder] Brian [Acton], and the rest of our team more time to focus on building a communications service that’s as fast, affordable and personal as possible.”

Trumps $8.5 Billion Skype Deal

The acquisition represented the likely biggest-ever price for a tech start-up, trumping the $8.5 billion paid for Skype by Microsoft in 2011.

“The size of this deal is really massive and it will get people talking about a bubble,” Opus Research’s Greg Sterling said.

He said the deal is a risk for Facebook because “in social media you have a flavour of the month, and next year we might have another app with extremely rapid growth”. I think the high price tag comes from the frustration of not being able to buy Snapchat,” Mr Sterling said. “Then there is the youth factor, Facebook really needs to have vehicles to attract younger users, and Instagram is not going to do that by itself.”

The acquisition helps Facebook tap into a teen demographic who eschew mainstream social networks for mobile messaging services. WhatsApp is adding about a million users per day, Mr Zuckerberg said on his webpage.

“WhatsApp will complement our existing chat and messaging services to provide new tools for our community,” Mr Zuckerberg said. “Since WhatsApp and Facebook Messenger serve such different and important users, we will continue investing in both.”

With this strategy, Mr Sterling says Facebook “is becoming a kind of holding company for different social-media properties that appeal to different groups”. Mr Sterling said Facebook may have some ability to “monetise” WhatsApp by delivering ads over the messaging service.

Roger Kay of Endpoint Technologies said WhatsApp has become one of the most popular mobile applications worldwide “because it allows you to message anybody anywhere for free”.

Mr Kay said the deal makes sense on one level because of Facebook’s record stock run-up.

“When you have a stock like that which has run up quickly and created a lot of paper value, it’s good to trade that for other value,” Mr Kay said, it’s not obvious how they can get $12 billion out of this, but it’s been clear for a while that WhatsApp is very interesting.”

WhatsApp only employs around 50 people total. At 32 engineers, that’s $500 million per engineer. Facebook currently boasts 556 million mobile daily active users, and WhatsApp alone already has over half of that at 350 million.

Facebook’s relaunch of it’s own Messenger – November ’13 – service led to a 70 percent increase in mobile service usage, most of that however took place in the USA and Canada, the acquisition of WhatsApp puts a serious patch on the company’s gaps across Europe, Asia – including India – and South America, where WhatsApp is much more popular than Facebook.

More Than Meets The Eye

UPDATE! 25 February 2014: As always with announcement as big as this, the real story dribbles out slowly. In the above we ponder how Facebook intends to milk whatsApp for advertising, and it seems we’re off mark.

Facebook CEO Mark Zuckerberg sees WhatsApp as a critical element in Facebook’s pursuit of connecting more people around the globe, however in this case it seems, without the cynical aim of targeting text message advertisements.

During a keynote speech at the conference following the WhatsApp announcement, the Facebook chief said that the mobile messaging app was actually worth more than what Facebook paid for it. WhatsApp’s revenue may not be in line with the price Facebook paid, Zuckerberg said. But WhatsApp may also be one of the few services on the path to having 1 billion-plus users, Zuckerberg said, and that’s what makes it valuable.

It’s unclear what Facebook’s plans are for further monetizing WhatsApp’s service. but since the acquisition, both Zuckerberg and Koum have sought to quiet rumors they might use ads to make more money from WhatsApp.

Zuckerberg instead said on Monday that Facebook could include WhatsApp as part of free or cheap Internet access in developing areas of the world, under Facebook’s Internet.org project.

It’s All About Population?

WhatsApp’s voice calling service, planned for later this year to augment its current text-message offering, could yield an influx of customers and strengthen the service’s already firm standing in mobile messaging.

WhatsApp intends to offer Internet-based voice calling by June, CEO Jan Koum said Monday during a speech at the Mobile World Congress conference in Spain. The service is expected to be available first on Android based mobile devices, later to Apple devices, with rollouts coming later to Windows and BlackBerry.

WhatsApp is already a leading player in a crowded market of messaging apps that also includes KakaoTalk of South Korea and Viber of Cyprus. The service has a huge user base: 450 million monthly active users, according to the company. But adding free voice calls could drive that number higher if enough people decided to shun traditional phone carriers in favor of the Internet.

The expansion could, in turn, bring new users to Facebook, which announced last week that it was acquiring the five-year-old company for up to US$19 billion.

As it works now, WhatsApp’s service lets people use their Internet data plans to send messages to each other as an alternative to paying a telco for SMS texting. It’s likely that voice calling would work the same way.

WhatsApp is free to download and use for the first year, after that, users can extend their subscription for $0.99 per year, according to the company’s website.


RELATED! Facebook Compared to a Disease… about to be cured

Facebook Compared to a Disease… about to be curedFacebook has been called lots of things since it rise to stardom in 2006. According to 2 US researchers however, the social network is most comparable to an infectious disease.

The researchers reckon that the online behemoth is experiencing a spike, right before its decline, they also claim the social network will lose 80 per cent of users by 2017.

Two doctoral candidates in mechanical and aerospace engineering at Princeton University made their claims in a paper published online at a scientific research archive, but not yet peer-reviewed.

Facebook losing 800,000,000 user might seem like a fantasy, if history is any measure however it may just happen.

Based on the rise and fall of MySpace, John Cannarella and Joshua Spechler say that Facebook, the largest online social network in history, is set for a massive fall :: Read the full Technoid article »»»»

RELATED! Did Facebook Sell Data From Users’ Private Messages?

Did Facebook Sell Data From Users' Private Messages?The social network behemoth that is Facebook, is being sued in a US court for allegedly selling details derived from private messages to advertisers without users’ consent.

Documents filed in California as part of a class action lawsuit are claiming that Facebook intercepted and scanned messages for information about its billion users.

The class action is being led by two Facebook users in the US, and is being brought on behalf of all users located within the US who have sent or received private Facebook messages that included a URL (webpage link) in the content of the message.

Facebook accumulates about 200 petabytes of data per year and is currently growing by around half a petabyte a day :: Read the full Technoid article »»»»

REBLOG! Facebook can juice WhatsApp billions from emerging markets

Facebook can juice WhatsApp billions from emerging marketsNews that Facebook has acquired messenger app market leader WhatsApp for $19 billion is hugely exciting for watchers of emerging markets.

While Facebook’s continuing growth in Asia, Africa, and Latin America has been widely reported, the addition of WhatsApp will add an entirely new (and lucrative) set of service offerings to the company portfolio.

WhatsApp is the “no bells, no whistles” messenger app, providing traditional group chat, photo sharing, and video sharing functions, with none of the monetized sticker or Emoji add ons seen in Line, KakaoTalk, and most recently Viber.

So is WhatsApp worth the $19 billion that Facebook have paid for it? According to a Jana survey of consumers in India, Africa, and Latin America, it might well be :: Read the full JANA article »»»»


REBLOG! Why Facebook Dropped $19B On WhatsApp

Why Facebook Dropped $19B On WhatsApp

With 450 million monthly users and a million more signing up each day, WhatsApp was just too far ahead in the international mobile messaging race for Facebook to catch up, as you can see in the chart above that we made last year. Facebook either had to surrender the linchpin to mobile social networking abroad, or pony up and acquire WhatsApp before it got any bigger. It chose the latter.

Internationally, Facebook was late to the Messenger party. It didn’t launch until 2011 after Facebook bought Beluga, and at the time it was centered around group messaging where SMS was especially weak.

WhatsApp launched in 2009 with the right focus on a lean, clean, and fast mobile messaging app. And while the international messaging market is incredibly fragmented, it was able to gain a major presence where Messenger didn’t as you can also see in the chart above.

Unlike PC-based social networking, there is no outstanding market leader in mobile messaging :: Read the full Techcrunch article »»»»



Facebook Investor Statement

Facebook Snags Mobile Messaging Service WhatsApp


source: facebook/whatsapp
source: reuters/afp/opus
source: scribd/techcrunch
source: wikipedia/ndpta/
image source: indeepmedia/reuters

One Comment on “Facebook Snags Mobile Messaging Service WhatsApp”

  1. 1 » Blog Archive » Facebook Snaps-up Mobile Messaging Service WhatsApp said at 4:26 pm on February 21st, 2014:

    […] The attraction runs much deeper than popularity, WhatsApp will not only boost Facebook’s international coverage, more importantly, it will add up to 350 million mobile users to Facebook’s mobile advertising offer :: Read the full article »»»» […]