592014 Facebook Buys WhatsApp for $19Bn But Why | Social Media Today

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Avtar Ram Singh

I woke up yesterday to the news of Facebook setting plans in motion to buy WhatsApp for a whopping $19Bn

USD At that point it hadnt been confirmed whether the deal had gone through and a lot of outlets were

reporting that this was something in the works My gut told me this would go through and as a marketer and

semi-techie I couldnt help but get a little bit excited

Sure enough Mark Zuckerberg made an announcement on Facebook saying that WhatsApps entire team will

be joining the Palo Alto outift

This snippet from Zucks post stuck out for me

WhatsApp will complement our existing chat and messaging services to provide new tools for our

community Facebook Messenger is widely used for chatting with your Facebook friends and

WhatsApp for communicating with all of your contacts and small groups of people Since

WhatsApp and Messenger serve such different and important uses we will continue investing in

both and making them each great products for everyone

But well get to my interpretation of that later

With a little over 450 million people using WhatsApp each month and 70 of them active every single day

WhatsApp has one of the highest daily active user bases in the world The messaging volume on WhatsApp is

fast approaching the entire global telecom SMS volume WhatsApp users share 400 million photos and 10

billion messages each day

Yes I said 10 billion messages

As the graph below illustrates WhatsApp has grown faster in a span of four years than Facebook Gmail

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Facebook Buys WhatsApp for $19 Billion But WhyPosted February 21 2014

Keywords Facebook Research Journalism New s Events Exclusive Mobile Social Media Social Netw orks

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Skype and Twitter - names that are much bigger than WhatsApp today

WhatsApp has been my choice of instant messenger for the last few years primarily because their CEO Jan

Koum believes that WhatsApp was never meant to be and will never be an app that makes money via games

or advertising In his own words We want to let people have a conversation

Thank you Jan My initial fear was that WhatsApp would seen see the odd ad become part of its network

Since I quoted Zuck earlier its only fair that I give Koum some time in the spotlight too

This will give WhatsApp the flexibility to grow and expand while giving me Brian and the rest of

our team more time to focus on building a communications service thats as fast affordable and

personal as possible And you can still count on absolutely no ads interrupting your

communication There would have been no partnership between our two companies if we had to

compromise on the core principles that will always define our company our vision and our

product

No ads Key takeaway

But why did Facebook buy WhatsApp for $19Bn I mean they could have bought 32 Hawaiian islands about

880 million Honda Civics 15 NBA Franchises Instagram 19 times over or 825 million bottles of Johnnie

Walker Blue instead

Because Zuck isnt as stupid as I am perhaps

592014 Facebook Buys WhatsApp for $19Bn But Why | Social Media Today

httpsocialmediatodaycomavtar-ram-singh2193266facebook-buys-whatsapp-19bn-why 312

For marketers this doesnt mean very much right now We dont have enough information about the acquisition

and we dont know how WhatsApp is going to change in the coming months So for now - dont start thinking

about marketing strategies for WhatsApp just yet

This does raise the question though - is WhatsApp really worth $19Bn No one has seen WhatsApps books

as yet but given that Twitter is currently valued at $2045Bn with an estimated 600 million users its not

absolutely insane (in terms of sheer corresponding numbers) to valuate WhatsApp at $16Bn I say $16Bn

because $3Bn was given to the WhatsApps owners and employees and wasnt part of the valuation of the

company

Many believe that Facebook just bought out a competitor That begs the question that does it make business

sense for Facebook to simply start buying out any competitors in the industry that arise First Instagram and

now WhatsApp

The picture is a little bigger than that While to most it would seem this is just a simple grab for one of the

hottest mobile apps in the world the reality is that Facebook sees itself as becoming a conglomerate in the

future Each company that Facebook buys (in this space) adds to the knowledge and data Facebook has

access to about the ways in which people choose to communicate

Yet looking into how WhatsApp has made money so far its only by having users pay for using WhatsApp

And while it costs as little as $099 to use WhatsApp for a year WhatsApp would generate $450million in

revenue a year During a call to discuss the merger with investors Zuck said WhatsApp was on track to reach

a billion users However - the more interesting aspect of this comes into play when you think about Facebooks

Internetorg project

Its Facebooks mission to provide access to two-thirds of the world thats not yet connected to the web and

thats exactly where a service like WhatsApp will boom A billion users might actually be a low-estimate for

WhatsApp in the coming years

And think about this In many developing countries the primary reason why a number of people upgrade from

feature phones to a smartphone is because they want access to WhatsApp Period They dont want to pay

their carriers exorbitant fees for a single text when they can pay for internet on the whole or even subscribe to

592014 Facebook Buys WhatsApp for $19Bn But Why | Social Media Today

httpsocialmediatodaycomavtar-ram-singh2193266facebook-buys-whatsapp-19bn-why 412

Login now to comment

Register to comment

14

Like itFebruary 22 2014

Marquis de LAFAYETTE says

Before we get wild-eyed about the prospects of Facebook Id like to point

out a recent study predicting a less than hallowed future for this absolutely needless

platform that seems to fascinate our youth (See here httparxivorgpdf14014208v1pdf

)

raquo Already a member

raquo Not a member

a service that just connects to WhatsApp and pay a very tiny amount to send unlimited messages on

WhatsApp

The more you think about it the more it makes sense that Facebook most definitely needed to buy WhatsApp

its their stepping stone into the markets in Asia and Africa that are about to explode with smartphone usage

Smart buy Zuck smart buy

raquo Login or register now to comment

Other Posts by Avtar Ram Singh

Instagram Hits 200 Million Users What Does This Mean For You - March 27 2014

5 Things You Should Absolutely Never Do on LinkedIn - March 22 2014

What Should Qualify as a Good Content Strategy Today - March 21 2014

Google+ Changes Shared Links Post Preview With Larger Images - March 15 2014

Brace Yourselves Facebook Pages Are Getting a Redesign - March 11 2014

Connect

See complete profile

Authored by

Avtar Ram Singh

Avtar Ram Singh is a social media strategist who values good content over all else Having worked with

global agencies and brands as well as fledgling start-ups he helps brands and marketers from various

verticals with their advertising and social strategies on a global scale Hes always around on Twitter and

you can also find him on Google+

Would you like to contribute to this site Get started raquo

592014 Facebook Buys WhatsApp for $19Bn But Why | Social Media Today

httpsocialmediatodaycomavtar-ram-singh2193266facebook-buys-whatsapp-19bn-why 312

For marketers this doesnt mean very much right now We dont have enough information about the acquisition

and we dont know how WhatsApp is going to change in the coming months So for now - dont start thinking

about marketing strategies for WhatsApp just yet

This does raise the question though - is WhatsApp really worth $19Bn No one has seen WhatsApps books

as yet but given that Twitter is currently valued at $2045Bn with an estimated 600 million users its not

absolutely insane (in terms of sheer corresponding numbers) to valuate WhatsApp at $16Bn I say $16Bn

because $3Bn was given to the WhatsApps owners and employees and wasnt part of the valuation of the

company

Many believe that Facebook just bought out a competitor That begs the question that does it make business

sense for Facebook to simply start buying out any competitors in the industry that arise First Instagram and

now WhatsApp

The picture is a little bigger than that While to most it would seem this is just a simple grab for one of the

hottest mobile apps in the world the reality is that Facebook sees itself as becoming a conglomerate in the

future Each company that Facebook buys (in this space) adds to the knowledge and data Facebook has

access to about the ways in which people choose to communicate

Yet looking into how WhatsApp has made money so far its only by having users pay for using WhatsApp

And while it costs as little as $099 to use WhatsApp for a year WhatsApp would generate $450million in

revenue a year During a call to discuss the merger with investors Zuck said WhatsApp was on track to reach

a billion users However - the more interesting aspect of this comes into play when you think about Facebooks

Internetorg project

Its Facebooks mission to provide access to two-thirds of the world thats not yet connected to the web and

thats exactly where a service like WhatsApp will boom A billion users might actually be a low-estimate for

WhatsApp in the coming years

And think about this In many developing countries the primary reason why a number of people upgrade from

feature phones to a smartphone is because they want access to WhatsApp Period They dont want to pay

their carriers exorbitant fees for a single text when they can pay for internet on the whole or even subscribe to

592014 Facebook Buys WhatsApp for $19Bn But Why | Social Media Today

httpsocialmediatodaycomavtar-ram-singh2193266facebook-buys-whatsapp-19bn-why 412

Login now to comment

Register to comment

14

Like itFebruary 22 2014

Marquis de LAFAYETTE says

Before we get wild-eyed about the prospects of Facebook Id like to point

out a recent study predicting a less than hallowed future for this absolutely needless

platform that seems to fascinate our youth (See here httparxivorgpdf14014208v1pdf

)

raquo Already a member

raquo Not a member

a service that just connects to WhatsApp and pay a very tiny amount to send unlimited messages on

WhatsApp

The more you think about it the more it makes sense that Facebook most definitely needed to buy WhatsApp

its their stepping stone into the markets in Asia and Africa that are about to explode with smartphone usage

Smart buy Zuck smart buy

raquo Login or register now to comment

Other Posts by Avtar Ram Singh

Instagram Hits 200 Million Users What Does This Mean For You - March 27 2014

5 Things You Should Absolutely Never Do on LinkedIn - March 22 2014

What Should Qualify as a Good Content Strategy Today - March 21 2014

Google+ Changes Shared Links Post Preview With Larger Images - March 15 2014

Brace Yourselves Facebook Pages Are Getting a Redesign - March 11 2014

Connect

See complete profile

Authored by

Avtar Ram Singh

Avtar Ram Singh is a social media strategist who values good content over all else Having worked with

global agencies and brands as well as fledgling start-ups he helps brands and marketers from various

verticals with their advertising and social strategies on a global scale Hes always around on Twitter and

you can also find him on Google+

Would you like to contribute to this site Get started raquo

592014 Facebook Buys WhatsApp for $19Bn But Why | Social Media Today

httpsocialmediatodaycomavtar-ram-singh2193266facebook-buys-whatsapp-19bn-why 412

Login now to comment

Register to comment

14

Like itFebruary 22 2014

Marquis de LAFAYETTE says

Before we get wild-eyed about the prospects of Facebook Id like to point

out a recent study predicting a less than hallowed future for this absolutely needless

platform that seems to fascinate our youth (See here httparxivorgpdf14014208v1pdf

)

raquo Already a member

raquo Not a member

a service that just connects to WhatsApp and pay a very tiny amount to send unlimited messages on

WhatsApp

The more you think about it the more it makes sense that Facebook most definitely needed to buy WhatsApp

its their stepping stone into the markets in Asia and Africa that are about to explode with smartphone usage

Smart buy Zuck smart buy

raquo Login or register now to comment

Other Posts by Avtar Ram Singh

Instagram Hits 200 Million Users What Does This Mean For You - March 27 2014

5 Things You Should Absolutely Never Do on LinkedIn - March 22 2014

What Should Qualify as a Good Content Strategy Today - March 21 2014

Google+ Changes Shared Links Post Preview With Larger Images - March 15 2014

Brace Yourselves Facebook Pages Are Getting a Redesign - March 11 2014

Connect

See complete profile

Authored by

Avtar Ram Singh

Avtar Ram Singh is a social media strategist who values good content over all else Having worked with

global agencies and brands as well as fledgling start-ups he helps brands and marketers from various

verticals with their advertising and social strategies on a global scale Hes always around on Twitter and

you can also find him on Google+

Would you like to contribute to this site Get started raquo

592014 Facebook Buys WhatsApp for $19Bn But Why | Social Media Today

httpsocialmediatodaycomavtar-ram-singh2193266facebook-buys-whatsapp-19bn-why 512

The study was promptly smacked down by both the media and Facebooks in-house

Media Guru which was to be expected But the study does contain a kernel of inerasable

truth If Facebook has gone viral it is because it demonstrates the same expansion

pattern as a virus And therefore why should it not face the same end as do most

viruses

Because Facebook is different Yes it is not an organism - even if it behaves like one

Balderdash

Facebook is taken seriously by the crazed-crowd of Siliconite gazers who think that the

only real value on earth is one described in dollars after a buy-out As was Netscape and

AOL and a whole host of Internet startups that like meteors in the night blazed across

the sky

Its true value is utility and for the moment its usefulness is highly limited In fact part of

its utility is downright dangerous - given that an idle (and stupid) remark can be taken out

of context and destroy a reputation many years later

Does mankind want really n truly to interconnect Humans have always wanted to go

beyond the horizon to see other lands other people It is a typical attribute of our species

since we are curious But putting ones picture up and connecting by exchanging

ritualistic information (What I just had for breakfast) is not the kind of interconnection that

is wholesome

Yes Facebook has become a ritual a ceremony in which we show ourselves to the world

in hopes that the mirror mirror on the wall will comfort us by saying Yes you are the

fairest in the land

Meaning further its a fad and like all fads it will come to an end

Should you hold on to Facebook stock Of course Ride it for all its worth Just watch for

when it crests because from that moment onward its all downhill

Share this comment

raquo Login or register now to comment

13

Like itFebruary 22 2014

Julenne Esquinca says

592014 Facebook Buys WhatsApp for $19Bn But Why | Social Media Today

httpsocialmediatodaycomavtar-ram-singh2193266facebook-buys-whatsapp-19bn-why 612

Hey thank you for writing this article this subject is the eye of the storm

right now As a social media user and CM I really am wondering why Facebook made this

move I just think theyre trying to position themselves on the market But somehow Ive

never liked Facebook and their policies as also many users around the globe so there have

been massive mobilizations to alternative platforms such as Telegram

Also we have to remember that also there have been movements specially from young

people from Facebook to other platforms so for me I believe that Facebook is not so cool

anymore and is doing these kind of movements to assure their status Well see what

happens thanks and cheers

Share this comment

raquo Login or register now to comment

18

Like itFebruary 20 2014

ANKIT SAPRA says

Nice Article

I used to wonder why whats app is so simple without adds and they only charge for

subscription of just 099 $ an year and even then many people used tricks and hacks to

continue without paying and some how a question that what exactly is the future profit

model of Whatsapp but now when Facebook bought Whats app all question being

answered -

May be WHATSAPP CONTINUED WITH FORMULA OF LESS PROFIT AND MORE

USER BASE BEACUSE THEY WANTED TO BUILT A VALUABLE BRAND A BRAND

WHICH IS SO POWERFUL THAT A known GIANT NOKIA IS SOLD FOR APPROX $7

BILLION BUT JUST A FEW YEAR OLD COMPANY SOLD FOR $19 BILLION

Lesson IF You cannot earn much profits by selling productsservices then build a place

in consumers heart as brand and then like Whatsapp sell to someone at an everest cost

that is the real game And after all its all about money money

Share this comment

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11

Like itFebruary 21 2014

Avtar Ram Singh says

Interesting viewpoint Make no profit for 3 years and then become a

billionaire because you have tons of free users on your service Not sure everyone is

bold enough to go with that but then again data mining is becoming big and is

becoming what everyone wants to do - and Facebook shelled out $19bn on just

that

Thanks for your comment Ankit

Share this comment

raquo Login or register now to comment

11

Like itFebruary 20 2014

Keri Jaehnig says

Avtar

Still processing Interesting points Watching other industries and how they are

considering the developing world markets - Quite a strategic move indeed

I agree with Warren Whitlock that user counts are not all that

But I appreciated your pointing out how people access in the USA and even Europe is not

the same as in all locations and we cant use the same model of thought for all

Thanks for your insight

~Keri Jaehnig

Idea Girl Media

Share this comment

raquo Login or register now to comment

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36

Like itFebruary 20 2014

Avtar Ram Singh says

Hey Keri - absolutely as of now its all speculation because lets be

real if we really knew what the entire acquisition was all about wed be part of the

Facebook board However - I do hope that the article was able to help make a little

sense )

Share this comment

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14

Like itFebruary 20 2014

Quantum PC Support says

Increasing popularity of wahts app compell facebook to buy it I think this

decision will work for Facebook All the best Zukerberg

Share this comment

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10

Like itFebruary 20 2014

Madhava Verma Dantuluri says

Interesting and wonder how come FB spending so much on a chatting app

Really too much money still FB would have had their analysis for long term

I like your analysis as But why did Facebook buy WhatsApp for $19Bn I mean they

could have bought 32 Hawaiian islands about 880 million Honda Civics 15 NBA

Franchises Instagram 19 times over or 825 million bottles of Johnnie Walker Blue

instead

Even i can top technology services companies also right

592014 Facebook Buys WhatsApp for $19Bn But Why | Social Media Today

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FAQ

Share this comment

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15

Like itFebruary 20 2014

Warren Whitlock says

I think user counts dont tell the whole tale

Ive ve not seen anyone who would know talking so this is speculation But the amount of

data from those users will be a gold mine without ever showing an ad on a chat screen

Share this comment

raquo Login or register now to comment

11

Like itFebruary 21 2014

Daniel Wentzel says

I agree Warren Much like you I suspect that it just may be all about

the data WhatsApp users share 400 million photos and 10 billion messages each

day Zucks next acquisition will probably be some data mining technology

company if he doesnt already have one A yellowbrrick road to an ever-increasing

stream of gold mines 247365

Share this comment

raquo Login or register now to comment

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