20 February 2014

What will happen to WhatsApp when it cost Facebook US$19 billion to buy?

Facebook today announced that it will acquire WhatsApp, a mobile messaging company, for US$16 billion plus an additional US$3 billion in stock. WhatsApp is popular in Asia and the Middle East, and reports that over 450 million people use the service each month, with more than 1 million new users registering every day.


Facebook noted that WhatsApp will follow the Instagram model, fluorishing in "an environment where independent-minded entrepreneurs can build companies, set their own direction and focus on growth while also benefiting from Facebook's expertise, resources and scale". 
 
Source: WhatsApp website

For the foreseeable future, Facebook said WhatsApp's brand will be maintained; its headquarters will remain in Mountain View, California, and Jan Koum, WhatsApp Co-founder and CEO, will join Facebook's Board of Directors; while WhatsApp's core messaging product and Facebook's existing Messenger app are to continue to operate as standalone applications.     

I know of people with two Whatsapp numbers, one for each phone; so 450 million accounts may well work out to much fewer than 450 million users. The numbers don't dilute the beauty of WhatsApp however. The app is like a calculator, good for just a few things, but these are precisely the things you need. 

It has basically replaced my email. If I have a grouse, it is that it only works on one device at a time. I would much rather that it is like Skype, available and synchronised on all devices.

And while Facebook says WhatsApp's 'core messaging' product will be separate from Facebook's messaging app, it says nothing about the peripheral messaging products. When you buy something for as much as US$19 billion, you need to find some way to get a return on the money spent.

In an environment where people adopt an app because it is private and has no ads, how far can you go without changing the product?