WhatsApp – what’s up??

WhatsAppNo matter how hard I look at this, I still can’t see a justification for Facebook paying $16b for WhatsApp.

The media speculates that it’s to acquire 450 million users, many from emerging countries who aren’t using Facebook at all, but many of them will be (which makes them worthless) and even if all weren’t that would equate to $35 per user, which is a massive acquisition price.

How can Zuckerberg have stood up in front of the board to justify paying that amount? If the issue really is that in emerging markets more people were using WhatsApp than Facebook, then spend more on promoting Facebook! The cost of running campaigns across all major media in those territories day and night for a year wouldn’t have topped more than $1b with change to CODE WhatsApp from scratch! In any case if Zuckerberg is true to his word, Facebook won’t change WhatsApp – which means those users won’t be exposed to Facebook or its advertisers any day soon. Go figure!

Putting this into some sort of meaningful context; if you were to combine the gross box-office takings (adjusted to today’s money taking inflation into account) of ALL the 60+ movie back-catalogue from Steven Spielberg (valued at $9b – that includes movie gold such as ET, Indiana Jones, Jurassic Park, Close Encounters, Private Ryan, War Horse, Schindler’s List, etc etc etc., – you would still have only spent HALF the money that was spent on WhatsApp!!!

Within the hallowed halls of Facebook Towers there is undoubtedly some amazingly sound and considered reason for purchasing WhatsApp Messenger (to give it its full title) – but my suspicion is that history will show this to have been the apex of Silicon Valley folly.

UPDATE: Meanwhile later that day…

Following on from the recent purchase of WhatsApp, and my blog post above, Facebook have now released an unbelievable set of financial reports with advertising revenues up 82% on the previous period and regular users now exceeding well over a billion. Over half of Facebook’s revenue is now coming from mobile – that in itself is an astronomical achievement given that just 12 months ago working out how to monetise mobile was seen as Zuckerberg’s biggest challenge.

To continue the mind blowing figures further, 80% of users are now OUTSIDE North America and this gives us the biggest clue yet as to why WhatsApp was seen as such a valuable prize. In India for example, due to high cost of SMS texting, WhatsApp dominates with the majority of smartphone contract holders using it all the time. On top of this in a recent interview Zuckerberg stated that Facebook was changing tack over previous mobile policy and breaking up the ‘blue app’ into constituent parts (messenging, photos, news etc) whilst at the same time ensuring access across all their mobile assets to the user’s social network – because this had proven to be what users wanted.

Does that justify the high price tag of WhatsApp? Only time will tell as its value will take some time to truly be seen – but given Facebook’s ongoing success few in the camp are going to stop to question it right now.


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