Really nothing can or will ever compete with the AOL/TW buyout. Seems unlikely that anything like that will ever happen again.
Interesting take on The Verge: Connect or die: why Facebook needed WhatsApp.
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While Facebook slaved away creating a utility used by 1.25 billion people, WhatsApp has replaced an essential utility for many, SMS. WhatsApp is used by over 450 million people every month, and often in places Facebook and its Messenger app had little success reaching, like Spain and Switzerland. By filling in the gaps with WhatsApp, Facebook’s communication pipes are thicker and spread far wider than ever before. The company commands an enormous portion of the world’s messages and photos sent per day. And don’t forget that WhatsApp users send a whopping 200 million voice messages per day. For many, WhatsApp has likely replaced voice calls as well.
Facebook’s latest acquisition might appear to be a simple land grab for the hottest mobile app in the world, with some delightful side effects, but the reality is far bigger. Each company Facebook acquires is another hedge against the various public and private ways people choose to communicate. Instagram lets people share photos in a way Facebook’s friending model wouldn’t allow. WhatsApp lets people share messages in a way that’s familiar to first-time feature phone and smartphone users — something Facebook can’t boast. Facebook’s product portfolio is becoming vast, full of competing services and apps, and that’s okay.
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Wendelius
Facebook’s product portfolio is becoming vast, full of competing services and apps, and that’s okay.
That they have yet to successfully monetise. You can’t drop 19 billion on an acquisition just for land grab. That kind of expenditure demands return from shareholders. Who knows what that means for WhatsApp at this stage, but regardless, I can’t help but think that return is going to be very hard for FB to quantify three years from now. I think they overpaid enormously for a company whose annual revenue is 1% of the asking price. Youch.
Hmmm, two comments stick out immediately in that article:
Facebook had the opportunity to make WhatsApp free, like all of its other products, but chose not to.
Huh? The acquisition has only just been announced, the ink is probably not even dry. It is probably not even finalised. This statement makes no sense. FB have had the opportunity to do nothing about WhatsApp’s monetisation as they have barely owned it 5 minutes.
WhatsApp CEO Jan Koum promises that the service will remain ad-free under its $1 / year revenue model
Those strike me as very bold words for a guy that, while having a seat at the table, will no longer have a controlling interest. As mentioned, I can just see no way that FB can make an acquisition of this value for a company that is returning annual revenues at 1% of the asking price. Surely there will have to be change in monetisation direction for WhatsApp in the mid-term future. Maybe it’s just ads, maybe its just bumping the subscription to $5, but shareholders will want something.
They should have bought the Line messenger app. That’s the best one out there,
Goddammit. How did I miss out on BOTH tech bubbles?
I’m using Metatweet HD. It is the Next Big Thing for sure.
That’s why most of the offer was made up of stock. Facebook knows its mostly worthless. It’s 16B at today’s valuations. Next year it will probably be 8B! Bargain!
True enough, although it’s still $4b in cash, which still seems like a hell of a lot for whatsapp, given their business model.
I just learned today that a majority of their users are still on dumb phones using a J2ME app. Makes a lot more sense how they could have that many users now.
Yeah, but dumbphones are on the way out. And again, revenue is capped at $1 per user per year, unless they change the business model, which from what I hear is a major reason why the app is successful in the first place.
Only thing I can see is integrating with other applications. Taking the messaging out of the phone and spreading it to other streams. Facebook’s internal messager never really took off. Maybe they are looking to dovetail an established app into their bread and butter. Imagine if you could message someone from your phone and it pings them on their Facebook page. If you can increase the time and frequency users are spending on your main page, you are increasing your ad revenue without having to deliver the ads to the phone on the other side of the conversation.
Not worth nearly the price they paid for it though. This is “Fox buys MySpace” levels of stupid.
Are they really paying $40 to acquire a user? that seems mad, but even assuming it’s sane (it isn’t, at $1 a year for a tech app…come on…), how many of them are already facebook customers anyway?
This is crazy people doing crazy things. This reminds me of warren buffet complaining that CEOS that dont know what to do with their cash pile should return it to shareholders.
There is an article on Slate pointing out why Facebook did this, or rather why it made more sense for Mark Zuckerburg to do this: Facebook buys WhatsApp: Zuckerberg’s total control guarantees more buying. .
Simply put, he owns 28% of the stock, but since it is “special stock,” he has 57% of the vote, which means he 100% controls the company. He could have paid himself 28% of that value in money, or taken 100% control over Whatsapp.
I’m not going to argue either way, but there is the reasoning.
Robert Reich’s meta take.
http://www.alternet.org/economy/robert-reich-whatsapp-everything-wrong-us-economy
Guess we all knew this was coming: Facebook/WhatsApp to share user data.
EU data laws are a big win here as people in the EU won’t be affected. Surprisingly, nor will the UK, though how long that will hold up in the post-Brexit world is pretty much anyone’s guess.
Signal seems to be the alternative.
Europe’s data laws are now part of the UK’s domestic law.
Good to know, cheers.