The course of our life is decided by the decisions we take over a period of time. Our success or failure, by and large depends upon these decisions. Affected with these decision, sometimes we go even philosophical. With so many geniuses around us, we have a feeling that these highly successful and mighty people take every decision right in their life and there is a distinct difference between them and we which makes them so successful. Is it? Do these high flyers are always correct in their decision-making process? Let us find out it through Facebook Whatsapp acquisition.
Was the Facebook-Whatsapp deal worth?
If you go through the Whatsapp acquisition deal analysis, you will find that no matter how smart we are, we commit mistakes. Everybody commits including Mark Zuckerberg, the world 3rd richest person. One major news of 2014 was Whatsapp acquisition deal for Facebook. There was so much analysis around Facebook Whatsapp acquisition price. It appears that things didn’t turn up as expected for Facebook and Whatsapp has become a liability; at least as of now. The Whatsapp deal is turning into graveyard for Facebook.
Let us see what happened?
The success of Whatsapp has been a phenomenal journey since its inception in 2009. It was a cross-platform messaging app initially and later it added other features like VOIP, Videocalings, file sharing etc. Like Orkut in the first decade of this Millennium, Whatsapp despite having large user base is not uniformly known worldwide. There are countries where people hardly know about Whatsapp. Also, there are countries where people see you from a different galaxy if at all you are not knowing or using Whatsapp.
At present, Whatsapp is planet’s most popular messaging app with an estimated subscriber of over 2 billion people. This is a staggering 30% people on Earth who know or use the Whatsapp. The user base of Whatsapp is mostly concentrated in Asia and Latin America.
Whatsapp was founded in 2009 by Brian Acton and Jan Koum. They both were the employees of Yahoo!. The earlier development process for Whatsapp as a phone number based text app was marred by regular crashes and failures. Whatsapp remained unnoticed until the first time Apple launched innovative push notifications, allowing users to be notified even when they were not using an app.
That was perhaps a eureka moment for Whatsapp developers. With Push Notification on now, people slave to their nature were addicted to this app with every message notification popping up on the top of their cell phone. Whatsapp became the necessity of each mobile phone. Also, Over the top (OTT) apps like this could be used for calling worldwide. It killed so much business of the telecom giants worldwide where cheap calls were being made over the internet through Whatsapp bypassing the hefty call rates of telecom operators.
With so many messaging apps around, Whatsapp was a growing juggernaut in the messaging app wars of the early 2010s. This came at a time when Facebook was marching towards fully realizing its ambitions as a mobile-friendly company and making messaging a core service through its own messenger. But in reality, it was nowhere a match with Whatsapp due to its bulky size, sluggishness and other limitations.
Success Secret of Whatsapp
Though there were several other factors also for the growth of Whatsapp. This was the only app which was running without advertisement and people loved it for that single reason. Any app without ads has altogether a different feeling. It could run on low internet speed and it was a dedicated message application. It is amazing how it sustained flawlessly despite so much pressure on servers and other infrastructure with almost zero revenue. The developers of Whatsapp were relatively unknown but with this phenomenal rise, Whatsapp was quickly demonstrating that it could compete with Facebook on its most important battleground where Facebook was present with its messenger app.
At the first glance for all of us, some of the decisions seem logical, some illogical, and some are even insane decision. What should have been Whatsapp acquisition value? Nobody understood it properly then. The same question arising again these days. Reason is that Whatsapp is eating a major chunk of Mark Zuckerberg profit margin due to its prolonged non-profitability. Was $ 19.3 Billion a correct Whatsapp acquisition cost?
What was the plan to monetize Whatsapp
Whatsapp is the biggest acquisition Mark Zuckerberg ever made. At the first place, it appeared an insane decision to buy something like this for such a huge amount which is clearly a liability. Whatsapp doesn’t give the monitory benefit to Facebook . Unlike other messaging apps, Whatsapp doesn’t follow the general revenue model of inserting advertising in the app services. For this reason, it always remains a nonprofit app. So what was in the mind of Mark Zuckerberg when he purchased an app knowing that he is not going to earn anything out of it?
Whatsapp was growing at a breakneck pace with a strong user presence in highly populous countries like India and Brazil. So from Zuckerberg point of view, any future business possibilities with Whatsapp could have been there. You could promote anything among those users. Buying the Whatsapp could have been was a rational decision. But after acquisition in 2014, Whatsapp has hardly been any ray of hope for Facebook tycoon. Whatsapp has not been able to even breakeven the operating cost leave aside the profit margins.
The real reason?
Where most of the people who though Zuckerberg decision was an illogical or insane one, here is another side of the story also.
It is believed that the spectacular growth of Whatsapp made Mark Zuckerburg lose his sleep. As of now in India alone, Whatsapp has a user base of somewhere around 450 Million whereas Facebook has 300 Million active users. Any social media platform more popular than Facebook was bound to create the ripple in Zukerburg’s Empire. A competition could be death to Facebook. So to contain it, something was necessary to be done. The acquisition was an obvious choice.
A general explanation behind this acquisition what Mark Zuckerberg gave was that through his initiative internet.org, he wanted to make the internet accessible to the remaining two-third of the people of the world. Whatsapp worked satisfactorily even on the low bandwidth internet access and reach to Whatsapp could make people more used to the internet and ultimately to Facebook.
But the real plan seemed something else.
As can be seen, from a private social media platform, Facebook is turning into a full-fledged market place. Large Whatsapp user numbers provide a good business opportunity for Facebook to encourage people to have a Facebook profile as well and be the part of Zuckerberg’s business model; willingly or unwillingly. In other words, Whatsapp despite being not profitable is providing a large number of users for other ventures of Facebook. The idea was simple, logical and feasible one.
The unexpected twist
The story doesn’t seem to end here. Here come the unexpected twists now.
The latest situation that has developed, is not so rosy for Zuckerberg. Whatsapp, in its expansion, has now grown so huge that it has started to dwarf the other applications of Mark Zuckerberg like Instagram and FriendFeed. The rush to these apps has drastically fallen as people are more glued to Whatsapp. It is so predatory now that it is eclipsing Facebook itself.
Contrary to Facebook estimate, it is being observed that people are now spending more time on Whatsapp than Facebook or Instagram. The average time spent on Whatsapp is far more than spent on Facebook and Instagram. That is a blow to Mark Zuckerberg. If users are not visiting Facebook, the revenue of Facebook is bound to dive. The impact of the Whatsapp is far reaching for Facebook’s other profitable apps. The Whatsapp circulating messages (fake or real) are creating more effect than a post shared on Facebook or Instagram. It is really serious for Zuckerberg now.
Taming the bull?
It will be interesting to see how Mark Zuckerberg is going to solve this riddle. He needs people on Facebook and Instagram for the revenue generation. These are the social platforms keeping Mar Zuckerberg as one of the richest Billionaire on earth. But the users are on another social application Whatsapp, a giant messaging app which is entirely free but occurs huge losses for him. As of now, the idea of monetizing through his cross-platform communication platform seems backfiring. It will be interesting to see how he fares from here on.