360° Coverage : Does WhatsApp deal show Facebook knows what's up?

2 Updates

Does WhatsApp deal show Facebook knows what's up?

Feb 20 2014, 4:44pm CST | by

SAN FRANCISCO (AP) — If Facebook hopes to remain the social networking leader, CEO Mark Zuckerberg knows the company must follow the people. That realization compelled Zuckerberg to...

Filed under: news

 
 
 

27 weeks ago

Does WhatsApp deal show Facebook knows what's up?

Feb 20 2014, 4:44pm CST | by

SAN FRANCISCO (AP) — If Facebook hopes to remain the social networking leader, CEO Mark Zuckerberg knows the company must follow the people. That realization compelled Zuckerberg to pay $19 billion for WhatsApp, a mobile messaging application that is redefining the concept of texting while its audience of 450 million users expands at an even faster clip than Facebook itself.

The deal sent shock waves through the technology industry because of the staggering price being paid for a four-year-old service that isn't as well known in the U.S. as it is overseas where WhatsApp has become a hip way to communicate instantaneously.

Although the amount of money involved is difficult to comprehend, the reason Facebook prizes WhatsApp is easier to grasp.

"This is a 'go big or go home' moment for Facebook," said Benedict Evans, a former cellphone analyst who is now a partner with the venture capital firm Andreessen Horowitz.

Just as he did nearly two years ago when Facebook bought photo-sharing service Instagram for $715 million, Zuckerberg is trying to ensure that his company doesn't get left behind as people move to the next trend.

And WhatsApp is what's hot now. The Mountain View, Calif., startup already has nearly twice as many users as the better known short messaging service, Twitter Inc. What's more, WhatsApp is adding about 1 million users each day — more than even Facebook.

The rapid growth has convinced Zuckerberg that WhatsApp is bound to exceed 1 billion users within the next few years to give Facebook even more telling insights into what matters to people. Even at its current size, WhatsApp is already handling an average of 19 billion messages per day. Those daily messages include about 600 million photos. Facebook believes that WhatsApp's messaging volume already exceeds all the traditional texts sent through the networks of cellphone carriers. Those short messaging services, or SMS, generate about $100 billion in annual revenue while WhatsApp charges just $1 annually after the first year of free usage.

By making a big bet on WhatsApp, Zuckerberg is trying to avoid the mistake that one of his heroes, Microsoft Corp. co-founder Bill Gates, made during the late 1990s when the Internet began to trigger an upheaval in business and culture. Gates recognized that Microsoft's lucrative Windows software franchise could be undermined by a variety of new services made possible by the Internet, but didn't act on some his early instincts.

By the time that Steve Ballmer had succeeded Gates as Microsoft's CEO in 2000, Google Inc. was already way ahead in the lucrative field of Internet search and Apple was gearing up to develop the iPod music player that paved the way for the iPhone.

Zuckerberg, 29, is showing his savvy and moxie by moving quickly to adapt to fickle tastes, said David Rogers, a professor at Columbia University's business school and the author of the book, "The Network is Your Customer."

"User behaviors in these digital experiences evolve so rapidly that you can't afford to play the Windows game and say, 'We are the dominant platform so we are just going to hold our position by making little tweaks,'" Rogers said.

Zuckerberg signaled his interest in mobile messaging apps late last year when he offered to buy Snapchat for $3 billion only to be rebuffed, according to several media outlets and technology blogs that quoted unnamed sources. It took less than two weeks to pull of the WhatsApp deal, according to Zuckerberg.

Being nimble has become even more important as smartphones supplant personal computers as the primary way people interact with digital services.

The advent of smartphones has been accompanied by a seemingly bottomless well of free smartphone applications that make it easy for people to hopscotch from one service to the next. The phenomenon has made it more difficult for a single application to become a one-stop shop that fulfills everyone's digital desires.

"The smartphone is a social platform in ways that the desktop computer never really was," Evans said. "A lot of the winner-take-all dynamics don't apply on the smartphone."

Facebook has been adjusting to this reality more quickly than many other Internet companies that began to thrive while PCs still ruled. While Facebook remains the world's most popular hangout with 1.23 billion users worldwide, a lot of its audience turns to other mobile apps for reading news, sharing photos and sending messages.

The fragmentation is prompting Facebook to develop a suite of discrete apps. Besides acquiring Instagram for sharing photos on mobile devices, Facebook recently introduced a new app for perusing news and now is trying to become a bigger player in mobile messaging with the WhatsApp acquisition.

Facebook is "trying to keep its coolness factor with all these different products that could turn them into a mobile media conglomerate," said Virginia Commonwealth University journalism professor Marcus Messner, who studies social media.

Facebook already offers its own messaging app tied to its social network. Although that app is popular in its own right, Zuckerberg noticed that it increasingly had become more like email instead of real-time communication like WhatsApp is. Most WhatsApp users also give the service access to the personal contact lists stored on smartphones, providing Facebook with another potentially valuable source of data.

"This is not an investment in the current value of WhatsApp," Messner said. "This is an investment in the potential of WhatsApp."

Source: AP Business

 
Update
2

1 day ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new compa ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

2 days ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH3 ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/31" rel="author">Associated Press</a>
The Associated Press (AP) is one of the largest and most trusted sources of independent newsgathering, supplying a steady stream of news to its members, international subscribers and commercial customers.

 

blog comments powered by Disqus

Latest stories

Modi, Abe strike chord; Kyoto to help make Varanasi smart city (Intro Roundup)
Kyoto, Aug 30 (IANS) Warmth, mutual admiration and convergent views marked the meeting between Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe Saturday as India hoped the two sides would strive to achieve in five years the unrealised potential of the past five decades.
 
 
Modi, Abe strike chord, India hopes ties reach full potential (Roundup)
Kyoto, Aug 30 (IANS) Warmth, mutual admiration and convergence of views marked the meeting between Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe Saturday as India hoped the two sides would strive to achieve in five years the unrealised potential of five decades.
 
 
Modi in Japan: Kyoto-Varanasi partnership pact inked
Kyoto, Aug 30 (IANS) Indian Prime Minister Narendra Modi began a five-day visit to Japan Saturday, a day that saw the inking of a partnership agreement between Varanasi, one of the oldest continuously inhabited cities in the world, and Kyoto, which was the capital of Japan for over 1,000 years.
 
 
Essar sells Kenya telecom business for $120 million
Nairobi, Aug 30 (IANS) Essar Capital Saturday announced the signing of binding agreements with Safaricom and Airtel for the sale of its telecom business in Kenya for $120 million.
 
 
 

Latest from the Network

Jessica Alba 'too independent' to stay at home
Los Angeles, Aug 31 (IANS) Actress Jessica Alba says she is too independent to be a stay-at-home mother. The 33-year-old, who has children Honor, six, and two-year-old Haven, with husband Cash Warren, says she still...
Read more on Celebrity Balla
 
UN chief slams attacks on peacekeepers in Golan
United Nations, Aug 31 (IANS) UN Secretary-General Ban Ki-moon Saturday strongly condemned an attack by armed elements earlier in the day on the UN peacekeeping force in the Golan Heights. Ban also slammed "the...
Read more on Politics Balla
 
32 militants killed in Pakistan air strike
Islamabad, Aug 31 (IANS) At least 32 suspected militants were killed and three hideouts were destroyed in air raids conducted by Pakistani army in North Waziristan, media reported Saturday, military claimed Saturday...
Read more on Politics Balla
 
Italian FM appointed as EU foreign policy chief
Brussels, Aug 31 (IANS) The European Council Saturday appointed Italian Foreign Minister Federica Mogherini as the High Representative for Foreign Affairs and Security Policy of the European Union(EU). Mogherini...
Read more on Politics Balla
 
One killed in police shelling at Pakistan protest site
Islamabad, Aug 31 (IANS) At least one women protester was killed and over 50 were injured when police fired teargas and baton charged Saturday night as the protesters moved towards the prime minister's house in...
Read more on Politics Balla
 
Miley Cyrus poses nude for magazine
Los Angeles, Aug 31 (IANS) Singer Miley Cyrus, who has been in the news for mostly wrong reasons, has now come in the spotlight for posing in the buff for a magazine cover. The 21-year-old, popular for her twerking...
Read more on Celebrity Balla
 
Police killed Knife-wielding man in China
Beijing, Aug 31 (IANS) Police shot dead a knife-wielding man during a routine anti-drug road check in southwest China's Yunnan province Friday, police said Saturday. The man suddenly took out a knife and began to...
Read more on Politics Balla
 
11 killed as bus overturns in Egypt
Cairo, Aug 31 (IANS) At least 11 people were killed and five others seriously wounded Saturday as a passenger bus overturned and caught fire on a highway in Egypt's northern province of Sharqiya, media reported. The...
Read more on Politics Balla
 
Britney Spears' ex-boyfriend banned from contacting her
Britney Spears' ex-boyfriend has allegedly been banned from contacting her. The 32-year-old singer was left heartbroken after she learnt David Lucado had allegedly cheated on her with an unidentified woman and now her...
Read more on Celebrity Balla
 
Ashlee Simpson and Evan Ross to wed in Connecticut
Ashlee Simpson and Evan Ross are reportedly getting married tomorrow (08.31.14) in Connecticut. The loved-up couple, who got engaged in March, are set to tie the knot in a lavish ceremony at Evan's mother Diana Ross'...
Read more on Celebrity Balla