With $20million per year in revenue, that means it would take over 700 years for Facebook to break even.
Any idiot would know that Facebook would change things up to profit from all those users and he knew it too. He just wanted to grab the money (understandstable) but now pretend like he had no clue (not understandable)
And now suddenly "wake up", after RSUs / stocks have vested, and cry foul: "Clashes over privacy...Values..."
To call it 'disingenuous' is putting it a bit too mildly.
Sorry if I'm too cynical on that; somehow I can't just seem to bring myself to assume good spirit in this case.
Are you sure of this? If they have a billion users, they're earning a billion dollars a year off of this. Considering that they don't need to store messages for an extended period of time, or run analytics, do they really need all that much?
[1] http://www.idownloadblog.com/2013/07/16/whatsapp-goes-free/
[2] http://www.iphoneincanada.ca/recommendations/whatsapp-messen...
[3] https://www.recode.net/2014/10/28/11632404/facebook-paid-19-...
What stops me from getting together a few friends and stealing your business model?
At some point you have to add value just to keep the wolves at bay.
I'd like you to read this and contemplate.
http://www.catb.org/esr/writings/unix-koans/ten-thousand.htm...
If you didn't bother reading and contemplating, here's the gist:
There is no wolf to fear. We are all finite beings with finite time and resources. You 'stealing' his hypothetical business model doesn't really accomplish anything except tie up your resources retracing his steps. You would be the fool reimplementing the pipe.
Now if you are the type of person who reduces life down to only pursuing the almighty dollar rather than trying to solve difficult extant problems... Well... Maybe that would be worth it to you. Even then though, he has already captured his audience, and he'll likely have a reputation advantage over your copy.
Anywho. Food for thought.
That's not how it works. I'm pretty sure you and I could write a Snapchat clone in a weekend. This doesn't imply we'll ever reach 100M users.
If we assume they maybe averages 75% of that over 6 hours, that's 146Gb/s * (60606)s / 8bytes/byte * 0.75 * 0.05dolars/GB = $14,782.50 for a 6 hour period (estimate).
That's highest listed bandwidth tier price for Azure, I'm sure they would pay less for a number of reasons. But let's just say that $10k for a whole day may not be out of the realm of possibility. That puts bandwidth costs possibly North of $3 million a year. Even at $1 million, that's a lot of money.
And if that's audio/video Vs just text, clever NAT hole punching techniques could reduce it if truly needed.
But, it seems WhatsApp was on SoftLayer? In that case their costs might have been vastly higher.
[1] http://web.mit.edu/e-club/hadzima/how-much-does-an-employee-... (This is old but nothing really substantial has changed except.)
Also there should be a huge possibility to increase revenue by selling API access (think appointment reminders etc as well as the whole bot ecosystem).
When Telegram started they talked about price and I think I remember being unconvinced. I wanted to pay. As we (used to) say here on HN: if you're not paying you are the product.
(Of course now we have learned that some companies charge us and still sell our (meta)data and advertise to us.)
Have you considered that Facebook might not be telling the whole truth?
"insignificant" compared to what, how much money Facebook makes off of every extra user (who wouldn't want to pay) on their platform? Making it free can only be a profitable move because of what Facebook could do with the data, not because a few million dollars a year is truly "insignificant".
https://www.sec.gov/Archives/edgar/data/1326801/000132680114...
He wanted to be sure they could provide a fast, reliable service and was concerned they might get swamped by an influx of users.
https://www.youtube.com/watch?v=puVxnKuFarA
According to the interview:
WhatsApp began as a "status" service. Original iPhone had no background or push notification; user had to start the app to check others' status. When Apple added push notifications to iPhone, they added this to WhatsApp allowing status to be "broadcast".
Users in Europe were paying high prices for international SMS. These users saw that broadcast status notications were similar to international SMS, but free. Some of them suggested this to WhatsApp and so WhatApp added messaging.
Then the app took off.
WhatsApp used FreeBSD, Erlang and SSDs when, according to Koum, everyone in Silicon Valley was using Linux, Apache, MySQL, Perl (LAMP) and HDDs. Compared to others in Silicon Valley, WhatsApp had far fewer servers and employees per user.
PHP, not Perl.
Twitter's failwhale-heavy Ruby experience is a good example. Ruby and especially Rails are good examples of trading hardware for programmer convenience. This is absolutely great when you're banging out an in-house app for 100 people, and there's no problem spending $1 per user-month on hardware. But Twitter's revenue is only $0.60 per user-month, and they need to spend on things besides severs. There is a reason that they needed to switch away from Ruby to a much more complicated architecture: https://blog.twitter.com/engineering/en_us/topics/infrastruc...
I also saw some people go the other direction. They had a Java app for serving a high-volume website. But the developers had a rewrite itch, and the execs were afraid they couldn't get acquired without a more hip technology stack. They even hired a fancy consulting firm to help, but when the first version was ready to go it was incredibly slow. Like two orders of magnitude slower to render a page. The rendering times were considered normal in Rails-land, but were a real problem at volume. So they spent another 6 weeks putting in a lot of caching while the ops people ordered a bunch more hardware.
To be fair it's tiny little messages, I'm talking one device does maybe a meg a day after communicating constantly
The only places he mentions 16 is when he talks about the "multimedia database". I think there were 16 sharded database servers.
I remember reading this when it came out https://blog.whatsapp.com/196/1-million-is-so-2011
Having been an infra engineer previously, that pricing sounds reasonable for a messaging service based on infra costs.
That said, they shouldn't need to keep them around for that long, unlike FB and similar.
http://www.thefactspeak.com/whatsapp-adding-one-million-user...
Even at $1/year - their 1.5 billion active users should be an equal amount of revenue. I'd say that's enough to cover the cost of servers and bandwidth.
However, if you are trying to build a messaging platform, which is what probably FB intends to do, then it requires more investment. Today, you might think that that is where the problem. All the users really want is basic messaging. However, in 3-5yrs from today, the reality may be very different (see WeChat or LINE in APAC) and WhatsApp maybe a complete misfit in that world.
All good products evolve. For something like messaging, if all you provide is a basic product, then you risk yourself being taken over by default platform apps (such as what happened with iMessage on iOS in US). You need stronger lockins and FB is well suited to provide those.
Do users "want" ads? (Assuming they have real choice.)
Is it the "irrelevance" of ads that disrupts aesthetics and insults intelligence?
Or is it something else about advertising?
What assumptions do folks make when they discuss online ads?
Do they assume that they know what would happen if they tried to charge user fees for their "service"?
Do they assume to know what users would do? (e.g., look for alternatives)
Do they assume to know what other software authors would do? (e.g., publish alternatives)
What if Facebook thought that users would stop using the "service" if it was not "free"?
What if Facebook thought it is more profitable and there is less potential for liability to users (who have paid nothing) if the "service" continues to be "free"?
There must be techniques to get around that. Maybe grant free or discounted accounts if you're connected with enough subscribers? Allow subscribers to gift free memberships to their friends? Maybe have a long "initial trial" (e.g. totally free for 1 year)?
I would make sense to me to scale the price to the market. Make it $5 in the US and 5 rupees in India.
Facebook makes $7 per month per user in the US and Canada. So, it's likely fairly close though.
I think YouTube has something like this (in the US) where you can pay monthly for an ad-free experience?
I too would gladly pay (anything reasonable) if it meant they'd split off from Facebook and become in dependent again.
The reason whatsapp got traction in the first place was it was free (for a year+) when SMS was not. If Whatsapp cost $1 then people would use whatever was free.
BlackBerry was the combo of the handset + the backend services hosted by RIM including BBM and people did pay a monthly fee for access to the latter (over and above regular carrier charges)
So very true.