IMHO, they were able to get to such widespread everyday usage because they such awesome and reliable technology. Much better than what Google have been able to provide with their hangouts app, for instance. Messages are always delivered instantaneously if you are online. If you are offline it stores it locally, and delivers it the moment you are online without messing up the order.
Never had any issues with them. They are really awesome. Congrats to them - IMO it's a great acquisition by Facebook.
In my opinion, this is probably the dumbest acquisition I've ever seen.
I had to join WhatsApp because most of relatives on Facebook moved on to WhatsApp and there are atleast like 6-7 groups on my WhatsApp. Friends, Office colleagues, cousins and other people.
I'm rarely seeing FB updates from my friends these days. Most of it happens on WhatsApp channels.
So its not a surprise FB bought them. Because if they don't they risk losing all users to WhatsApp, at least that's how it is here in India.
We're on pay-as-you-go plans, but usually on nice phones we brought unlocked from our home countries. I'm typing this on my trusty Air, which is tethered through an unlocked iPhone 4S.
I'm also listening to waves crash. We got our first swell in a month yesterday, and non-locals are showing up a day late ... 4 or 5 of them. A crowd. I was the only one out for the good stuff yesterday, and I sucked the marrow out of it, and am instead enjoying sitting on my balcony drinking coffee and vagando here on HN. Ahhh.
Where was I? Oh, yes.
I can confirm the crazy-fast penetration of both smartphones in general (probably way over 90% android), WhatsApp in particular, and the FB/WhatsApp/SMS mix.
So WhatsApp isn't the internet here yet. But it's definitely got brand parity with Facebook around here. Which is pretty amazing considering their relative valuations.
Fb buying them is a deal breaker. None of my "well read" friends are going to trust WhatsApp with those nude photos, short pornos or very very personal information we share.
I don't know. Facebook just looks like a desperate chap.
I'm curious what the future will bring.
But the issue is if everyone else is on a system, the only way to sanely communicate with them is to join that system.
I had to join FB and Orkut for the same reasons.
Until then, I'm marginally lonely on my xmpp clients, though the facebook integration really helps.
The value in Skype, WhatsApp, etc. is the vast amount of work and codebase that goes into punching holes in routers/gateways/NATs to make the internet actually work like it was originally designed.
If anything, I think I've used google hangouts than most of the other IM platforms lately.
Unless you actually mean "receive messages [to your device] when you're offline" and how the hell would that work?
[1] https://prosody.im/doc/modules/mod_offline [2] http://www.process-one.net/docs/ejabberd/guide_en.html#htoc4... [3] http://xmpp.org/extensions/xep-0160.html
In 1984 you needed to hand a copybook to someone you wished to invigilate. Today you invigilate by billions for $40 per head :)
This is why, IMO, Apple, Google and Facebook are the only companies really in a position to change the messaging game in the US. There is space for newcomers (see: Snapchat), but they're going to have to work hard to spread beyond their initial niche.
Apple is driving iMessage adoption via iOS, albeit mostly only for messaging between iOS devices. Facebook has a solid mobile install base already, but they can't seem to figure out how to convince users to use Facebook messaging. It actually works really well for me, but no one I know actually uses it.
Google seems to be in the process of merging Hangouts and SMS. They're already the same app on Android, but you get to pick the protocol. Their logical endgame is to move all messaging to the Hangouts protocol, and fall back to Google Voice to deliver messages to users who don't have a Hangouts client.
If Google can pull this off I think they're going to absolutely kill it, but they seem to be having a lot of execution problems.
I lived in the US for a while, and I can't really come up with any reason why it should be different there. Only that way more people are on Facebook (and those are also way more active). Still, I can't really explain why texts stuck around even for smartphone users.
When I was shopping for a mobile phone plan for my sister four years ago unlimited SMS were hard to find. Sure, now you get them everywhere, but I don’t think standard smartphone contracts had them four years ago. You had to pay obscenely more (something like double the monthly cost) if you could get unlimited SMS at all. I remember that the high cost of SMS were a real sticking point for my sister.
In my experience smartphone contracts in Germany tended to be much cheaper than in the US but you would also get substantially less for your money. That’s still the case today with included unthrottled data volume.
So maybe that’s one reason why Whatsapp took off. Another one I can think of is that Germany is less of an iOS monoculture than the US. Android is more widespread, so iMessage frequently gets you no benefit at all.
Yes, that is exactly what it means unless there's some research data provided. Obviously it is easier to scale our current surroundings to the whole country, than to really go around and see how things are outside our social circle. Then again, same applies to you too, just because you haven't heard of WhatsApp before doesn't mean it wouldnt be big in the UK. :)
Its popularity has been declining due to Facebook and Android - Facebook on Android works really well lately, most of my acquaintances are on Facebook already and everybody with an Android (which is most of my acquaintances) has either Facebook or Facebook Messenger on it. This is happening because Facebook is the messenger that finally dethroned Yahoo Messenger in my country - really, I'm serious, Yahoo Messenger was still really popular until about 2 years ago. And Android penetration has been phenomenal, due to cheap models being advertised by mobile carriers and sold instead of feature phones.
> Their logical endgame is to move all messaging to the Hangouts protocol, and fall back to Google Voice to deliver messages to users who don't have a Hangouts client.
You're a US citizen and so you might have missed the part where Google Voice is not available outside the US - no alternative can win over SMS, unless it is international.
I actually hate them for trying to take over my SMS messaging and I'm glad that I still have the option of not allowing them to do it on my Android, even though I'm also a regular Hangouts user. What is it with these companies trying to be everything to everybody?
> It just makes it easier to manage SMS and Hangouts conversations side by side through the same app.
No it doesn't, it's actually quite confusing. At some point I sent a message to my wife, without paying attention if it's SMS or not and so I sent it by Hangouts because that's the default, but she's not using her Google account at all and never received the message. And you have to pay attention like every single time.
It's much, much easier to separate services, when they are in fact different. For SMS, I open the SMS app and I send and receive SMS messages. For Hangouts, I open the Hangouts app and I send and receive Hangouts messages. When I'm not sure what protocol to use for somebody, I go to that contact's details and check out the available options. If I have to read new messages, I click on the notification. If I want to reply to a new message, I'm already in the right app. What could be simpler than that?
Trying to combine Hangouts or any other SMS alternative with SMS in the same app is first of all a huge usability fail - unless that service would fallback to SMS in case delivery didn't happen, in which case there's always the question of unexpected billing, because your phone number is going to have to send that SMS and SMS can get quite expensive - so no, it's an epic failure.
I think I will give it a serious thought if it open sources its code base or otherwise it's as good as Viber or Line as an alternative. Same goes with helm.is.
Why can't it just be simple? Get the app and pick a phone number to message. The SMS situation is so bad that it's got a giant flashing neon sign "Disrupt me please" all over it yet none of the big players are stepping up.
There is no such thing. IM is extremely fragmented into local markets, and you will find different solutions being the de-facto solutions at different locations.
For reference, I'm from Europe and outside the Netherlands I have never heard of anyone using Whatsapp. I tried it once, and it found 2 contacts among my 100s. It was instantly deleted as it was of no use to me.
I also remember it causing stability issues with my Android-phone, ensuring I will never ever install it on anything I own ever, for life, unless my primary intent is ruining that device.
What's "hot" here, or at least what I've heard of people using is MSN, Skype, FB Messenger, Hangouts, Twitter(!) and IRC.
ChatOn has some userbase too.
[1] http://blog.textit.in/your-path-to-a-$16b-exit-build-a-j2me-...
- It's not 10c/p per message which if you're talking a lot adds up. - You can send photos and videos and they show up in the stream. MMS isn't actually configured for most people even if it didn't cost 50c a message. - It does group messaging. - Avatars, UI etc
The reason it's popular over apps I think is largely down to savvy use of network effects, particularly that your username is your phone number, so it can scan your phone book and instantly show you who you know that has it. Plus it's available on iPhone, Android, Blackberry and as that article at the top of the main page says, J2ME (news to me but I'm in Europe so not that many feature phones around these days).
I'm from the UK but live in Barcelona and it has 97% penetration here.
Define virtually free? I pay like 10 bucks a month for unlimited SMS, that's hardly virtually free!!! If I didn't they cost like 10 cents a message. That's an insane price for sending or receiving a very very small message that costs the phone companies almost nothing to send. I see it working well for say prepaid plans or barebones plans.
Also, where I live (UK) literally everyone I know who has a smartphone is on Whatsapp. It's completely ubiquitous.
* Works on all phones
* Has persistent chat groups
The funny thing is that in places like USA, you pay exorbitant amounts (~20 USD per month) for text messaging (when the real cost should be almost 0), yet it's still not caught on here - which is kinda sad.
The US at the time had generous calling plans, and people there didn't yet discover the nice social effect of communicating silently (with texting).
Having to remember which messaging system you should use for each person is annoying, so most people just use one.
Additionally, it's not just popular in "the developing world" (whatever that means), but also in many European countries. I haven't seen a map, but I suspect that Whatsapp is very popular nearly everywhere outside the US and China.
I'm way above that, yet I opted for the pay per text plan and paid 20 cents per text. All my friends made fun of me, but I saved a few dollars since iMessage didn't count toward my costs. However, it effected how people without iPhones would naturally choose to interact with me.
Basically, everyone loves iMessage, but no one thinks twice about alternatives. The general assumption seems to be that it's a god given right that you can send a text to a phone number. iMessage did such wonders obscuring that, whereas having to actually download some other app unveils everything.
Even if you are at poverty level and qualify for a free phone (through the Lifelink program, or 'Obamaphone') you still get something like 250 texts included with that
In India, you generally pay per text message - so if you can convince even 3 of your close friends to start using Whatsapp, you save (say) 20% of your phone bill.
Here in US, if you are going to send more than a few texts a month, you are going to be paying 20 USD. So there is no real monetary incentive (initially) for you and two of your friends to switch to Whatsapp.
http://telecomtalk.info/tata-docomo-launches-unlimited-whats...
SMS costs Rs1 per
We also have SMS packs like 100 SMS a month by paying Rs 40 or so. But a DoT rule (which was actually twisted and misinterpreted by telecos) make that plan ineffective on any festive day and on those days you pay for each SMS and the rate is almost double or x3 or sometime x4 of what you would have paid without the SMS pack :-)
That charge will come to each user of the group whenever a message (%160 chars) is sent.
Edit: Moreover, the telecoms do make money on the data plans don't they?
Essentially WhatsApp is free messaging as long as you have a internet connection. And that's pretty cheap these days.
- people (especially preteens) with an iPod Touch or iPad Mini but not a smartphone/texting plan
- people with internationally distributed friends
- Android users who want iMessage functionality (friendly long messages, delivery confirmation, read receipts, sane group conversations, etc)
If I recall correctly, iOS WhatsApp is iPhone only. It won't run on anything that doesn't have a phone number and can't receive SMS or phone calls (necessary for activating the application).
When I first bought WhatsApp, I bought it in iTunes on my Mac. I only had iPod touches and iPads at the time, and it wouldn't sync the application to any of them. I seem to recall that I tried to follow a direct link to the App Store entry from Mobile Safari, and it said that my devices were incompatible.
I had to sideload the WhatsApp.apk on to my Nexus 7 Wi-Fi.
Then you receive your activation code on your phone and tab it in on your tablet.
It works perfectly well.
It's probably paid for itself in just a few days of use.
There are some differences which is possibly because it's the mobile equivalent.
One is that you don't have to add any new contact. If anyone on your phone book has whatsapp, they instantly show up i.e your identity is your phone number.
Two when you join a group if there is a person already in the group whose you know in real life, but don't have the number of, it's easy to get their contact into your phone book.
I was able to reconnect with quite a few of my old high school friends using whatsapp. The interesting thing was that everyone spread around the world. Many are in the US, but several are in UK, some are in the middle east, many in India, a couple in Singapore and the group chat made it possible for everyone to instantly connect without having to "add a friend". Plus, no cost difference to send a message to someone in the UK or India.
Like you said, it's the mobile equivalent but the group chat feature is what makes it really useful esp. if you have friends in multiple countries.
[0]: http://www.theverge.com/2012/12/20/3787472/whatsapp-for-ios-...
Facebook can mine some more data from this I guess, but something rather marginal from what they already have.
The more Whatsapp satisifies my sharing needs, the less I use Facebook. And that is a competitive threat to Facebook. Instagram was similar - a light-weight social network built around photo-sharing.
I think Zuckerberg is a deeply strategic thinker trying to avoid the pitfalls of the "Innovator's Dilemma". Both Instagram and Whatsapp are classic examples of what is described in Innovator's Dilemma - light-weight products that can slowly eat into the market share of the incumbent, and ultimately displace it.
Edits : formatting.
But boy - 16 billion.
It's a $19B investment in trying to keep people on Facebook. $20B if paired with Instagram and $24B if they had acquired SnapChat.
The numbers sound crazy but they're trying to hold on to and grow a market cap that's currently $175B.
Zuck has some steel nuts but it's what got him to the $175B number in the first place.
I don't see any evidence to support that claim. It is a different strategy, but I don't see any indication that it is better. Flushing a few billion dollars down the toilet is a different strategy too, but that doesn't make it better.
How much of that $400M price was set based on $-per-user?
On top of that, this was back in the first bubble, and we saw how that went.
With 10 million users, you could grow 100x, or more.
With 400 million users, 100x growth is harder.
Microsoft had its own Live Messenger and Lync too, so the acquisition in both cases was for the user base and the brand than technology IMO.
This is the question. Apparently a sizeable number of teenagers and pre-teens have zero interest in FB. It's where their parents post cat pictures and make dinner plans. From what I understand, Kik, WhatsApp, and Snapchat are all what's "cool" with the under 18 crowd. This move may ensure that FB still has sufficient data to mine on this demographic in the future.
Motorla Mobility was aquired for 12.5 billion.
I don't even know what to compare the whatsapp aquisition to. The valuation seems quite insane.
With such a large user base and their established mobile presence it would have been fairly easy to challenge Facebook in the social network field, so Zuckerberg might have seen that coming as well. In that light the announcement that Whatsapp will basically stay the same actually makes sense - it will stay the same and will not develop those features that could have threatened Facebook in the long term.
Well, I already sent some messages to my friends to move on to threema, which has the added benefit of having encrypted messaging and being located in Switzerland.
That's fascinating and completely believable. The question will be can FB move those people to their own platform in the future and quietly retire Whatsapp in the future.
It's interesting that the CEO of Whatsapp is joining the FB board since that will affect the direction both products take.
To get $16bn cash from Facebook is hilarious.
Next time a start-up says they won't pay you market rate because of x, y, and z just walk away and laugh. For the sake of a few thousand dollars in wages, you could make them billions.
Don't work for cheap bastards. Funny how engineers are supposed to sacrifice yet we never see a lawyer or accountant charge below market rates, and their work can save businesses millions as well as jail-time.
And yes I do agree with you. I recently rejected a offer from a start up for offering 50% below market rate.
Seems like I made a smart decision.
If you've only been there 2-3 years, that's a substantial bonus that pushes your pay above market rate.
16B * 10% * .5% = 8 Million
The opposite of Facebook, Google, Twitter, Dropbox, Palantir, etc...
How much cash did Steve Case manage to withdraw from the stock market piggy bank?
If any Board of Directors tried to pull off that kind of stock-based deal today, they're going to have a proxy fight on their hands. These days, the shareholders of the target company are going to want cash.
But during Bubble 1.0, plenty of bubble companies acquired other bubble companies.
Not saying it's impossible, but they're already very large. They have as many users as they're going to get (who isn't on there now?) so they need to earn 7x the income from the existing base.
Because delusional people still didn't learn their lesson from the first bubble.
>Do you have any evidence of this
Their P/E is 112. That's the very definition of overvalued. The price of their stock makes the company worth far more than they earn. If you purchased facebook, it would take you 112 years to break even on that "investment" at their current earning rate.
"The deal is being cut for $12 billion in Facebook shares, $4 billion in cash and an additional $3 billion in RSUs for employee retention."
21% cash.
They are like a social networking black hole, what makes them big is that they are already big, and that's all.
So if anyone starts taking away their daily active users, even if they were only taking a few percentage points off Facebook's metrics, they are effectively threatening to break Facebook's business model and put them out of business, and it makes sense to spend almost anything they can afford to neutralise that threat.
Customers (lists/relations/etc) are considered intangible property with value. In the tax and law worlds, IP actually refers to intangible property in general, not just intellectual property (copyrights, trademarks, patents, trade secrets, etc.). However, for most companies, their intellectual property is their most value IP.
If everyone stopped using Facebook tomorrow they would lose a lot more than 3% of their value, though.
But I suspect part of it is, what is the lifetime value of a Facebook user? What is the lifetime value of a Facebook user if WhatsApp remains a competitor?
This is another defensive move. Hundreds of millions of people sharing rich media in realtime on non-FB services is a genuine threat.
It's really a direct result of smart mobile devices. Facebook used to own the user's contacts, but now independent apps have direct access to device contacts without Facebook.
Yup, I agree entirely. This wasn't about getting new users, it was about getting the content to run across their services.
Respectfully, I don't know if that's the right assumption. Facebook has users. A metric shit-ton of them. :) In fact, many of WhatsApp's users are Facebook users, and vice versa.
This isn't a user acquisition play. It's a user engagement play. Facebook -- like everyone else in the world -- is well aware that it has an engagement problem. It also has a retention problem, especially with younger users (who are flocking to messenger programs). Finally, Facebook has some challenges internationally, where the social networking space is more regionally fragmented. WhatsApp is a lot bigger overseas than it is in the US (largely because it's a free alternative to SMS in countries where SMS carries significant charges).
So what's this really about? This is another defensive acquisition on Facebook's part. Entirely overpriced, in my humble opinion. Instagram was, in retrospect, an incredibly smart defensive buy. WhatsApp at $16 billion? Less clear.
Not nitpicking here, just genuinely curious. What do they charge in US for sms? Here the cheapest package i suppose would be 20,000 SMS per month for $1 per month. I normally use the 1200 SMS per week for 10 cents per week though, as my usage isn't that much.
FB market cap ~170B
.75B users (EDIT: originally quoted FB 1.2B users, but that is the total count and WhatsApp quotes active users)
--> market cap implies roughly $225 per active user.
In that light, 40/AU is cheap. Even if you assume 50% overlap, 80/AU is still a deal compared to how the market values FB users
There's no hope of WhatsApp ever justifying this purchase price, not even remotely close. Facebook shareholders just got screwed massively. This deal will be written down in a big way. Zuckerberg threw a dart at the board out of desperation.
[0]: http://investor.fb.com/releasedetail.cfm?ReleaseID=821954
Or they need to find a way to increase revenue greatly without alienating users too much...
[0] http://files.shareholder.com/downloads/AMDA-NJ5DZ/2971107785... (page 12)
They bought the photo company at what seemed an outrageous amount in part to co-opt a competitor. In the end it was profitable. They alter their feed to look more Twitter-like, encouraging people to avoid the competitor. I see this as defense too. It isn't about new users, it's about corporate competition.
Are you talking about Instagram? Unless I've been living under a rock I haven't heard or read anything that says they're profitable.
WhatsApp current has 430M monthly active users[0], compared with FaceBook's 1.2B[1] monthly active users. Tripling their userbase would make them the same size FaceBook is itself.
ED: Corrected as child comments pointed out.
[0]: http://blog.whatsapp.com/index.php/2013/12/400-million-stori... [1]: http://investor.fb.com/releasedetail.cfm?ReleaseID=821954
241,000,000 active users
30,230,000,000 USD market cap
----
$125 per userHere's a prediction: as the easy money QE party comes to an end, the stock market melts, Twitter's growth grinds to a complete halt, investors realize there's only so much time in the day and Twitter has lost the messaging space, Twitter is worth $5 to $7 billion if they're lucky.
It's not the QE money pumping up Twitter, it's a combination of tech being hot and a limited number of shared available (much of TWTR is still in lockup). If it were QE you'd see all sorts of firms with crazy valuations, but the standard blue chips are still pretty standard.
WhatsApp charges annually for this (already free elsewhere) service. So I'm pretty confused why people would use WhatsApp rather than one of the many (Kik, Hangouts, Facebook, etc.) alternatives available?
If people could migrate their WhatsApp account they pay for into a Facebook account which is free it's a win/win for FB. They get the users ditching the paid service in exchange for adding nice numbers to their quarterly reports for signups, and they get a nice revenue stream for the hold outs that avoid FB because it's FB but are willing to part with $1/year for that functionality.
Smart move on their part, wonder if their name will taint the product for the existing userbase and send them to the aforementioned alternatives.
edit: said $10/year, I accidentally a 0.
You get a free trial year. "For all phone types, WhatsApp is free to download and try for the first year. After, you have the option of extending your subscription for $0.99 USD per year."
I guess FB is in the market for any large scale mobile apps (first photos, now messaging) to ensure they have a dominant foothold on mobile.
There are a limited number of users out there. Emerging markets aren't growing fast enough and aren't going to be strong soon enough to support the FB's growth rate. It seems investors rely a lot on the daily users metric as it translates into more potential advertising revenue.
This acquisition will certainly help that number, daily active users.
The move is probably largely anti-competitive, but there are certainly inroads to drive additional facebook engagement, which further boosts revenues. It's expensive, but remember that FB is a 170B company.
Lets just hope that FB doesn't get too invasive with the product.
Engagement doesn't directly translate into money.
Remember that while many of those have both WhatsApp and Facebook, they are far more likely to use WhatApp than Facebook. You can ignore facebook but cannot ignore incoming texsts. Still insane.
Why would messaging be a winner-take-all market? I mean, it's just pushing around a bunch of bytes. Shouldn't be too difficult to specify.
And the carriers charged 20 cents per SMS [1]? Yup, I remember those days. No thanks.
[1] http://gizmodo.com/5832245/atts-new-text-plan-overcharges-yo...
(I'm not going to switch to the 2nd best app where I can only reach 10% of my friends.)
There is no reason why the social network of mankind should remain captured in the userbase of a single messaging app. And it is the abstract social network that does provide the network effects.
Funny enough, they also fail to see that forcing people to adopt something doesn't work either. For a company that lives off advertising, they sure don't show much skill at marketing.
Would I be required to install a new app for checking an additional inbox?
It'd probably have to be a system where the server must verify that the number actually belongs to you by sending you a "traditional" SMS with an access code. You'd also need a trust network among the servers or else there would be servers announcing every telephone number out there as theirs.
Regarding the app, I guess any app that supports the protocol would do, even ones that also do other things. This should produce a healty app ecosystem.
I think FB's high profile acquisitions are driven by fear of survival first it was Instagram and now its Whatsapp, which was clearly a very great threat, I am sure, it contributed to at least some double digit percentage drop in daily time spend especially in India... unlike say Google's acquisitions, which are typically done to grow things think YouTube or Android or Robotics companies...
(A page out of Microsoft's play book.)
Edit: The Facebook Messenger has the features of WhatsApp already?! News to me, so you have a point re FB advertisement. :-)
400,000,000 active users [0]
16,000,000,000 USD
10 years
----
$4 per user and per yearRemind me what AOL Messenger, MSN Messenger, ICQ, Yahoo messenger, are worth today.
What if they have 40 million users in ten years? And never generate a dime of serious profit in the meantime.
Then it would be a net loss. But 3B loss for a possible 1 billion customers sustainable business is not huge.
Same thing as with Instagram.
The fact that they can spend so much money on this (and that their investors allow it) shows just how much they want to remain on top.
Like, I don't know, maybe a steel mill or copper mine or something.
1. What's to complain about? 2. It wasn't all about users, it's about the network, growth, potential, space 3. Give me some context for why $40 per user for a company that makes a ton of money on their users is too high?
Anecdata: I get a lot more messages on FB messenger than WhatsApp...
...WhatsApp certainly isn't dominating in the Asian markets, you only have to look at WeChat.
I guess maybe if I wanted to send a text to somebody in Europe.
With WhatsApp you don't need to worry about all these things.
Though I'm not sure about you stats for usage.
[0]: http://sequoiacapital.tumblr.com/post/77211282835/four-numbe...
This creates a very unhealthy attitude around tech startups that will have a cascading effect on the entire industry. It's like a hegemonic military policy. The strategy doesn't matter, as long as you have a big stick.
> WhatsApp will remain autonomous and operate independently. You can continue to enjoy the service for a nominal fee
Now it makes even less sense.
[0]: http://blog.whatsapp.com/index.php/2013/12/400-million-stori...