Friday, February 28, 2014

(Practically) Free Texting for Everyone

When you want to reach someone what do you do?

Post on their Facebook wall?
Send a Facebook message?
Like their photo on Instagram?
Shoot a text message?

Interestingly enough, none other than our good friend Mark Zuckerberg owns each of these options. Facebook now controls most channels of communication that people use to connect with friends. After a small fee of $19 billion, Facebook bought WhatsApp, a messaging app that bypasses any SMS form of texting fee. So, why is this important? To tackle this question, let’s start by understanding the app.

The goal of WhatsApp is to offer a free solution to text messaging and voice calling that bypasses the need for phone plans and fees. The app is free for the first year and only $0.99 per year after that, a large difference from the $100 billion cell phone plan industry! Countries that cannot afford the expensive plans have caught onto WhatsApp and are able to bypass those fees as well. You do not even need to have a smart phone to have the app! There are 450 million active users of the app, with 19 billion messages sent and 34 billion received per day. The discrepancy of "sent" to "received" messages is because of group messaging, where one message sent to ten people translates to one sent and ten received. This level of engagement is actually higher than Facebook itself. Most importantly, while not widely used in the U.S., WhatsApp has 40 million users in India and 39 million in Brazil. Those countries are highly coveted by tech companies seeking to expand their global footprint. And little old me thought the app was obsolete…

We can now see where the attraction came from to acquire WhatsApp. Facebook already has a grasp on many mediums of communication. Its mission is to make the world more open and connected and to help create affordable and accessible Internet to the two-thirds of the world that is not connected. With WhatsApp they transcend to the entire mobile population. This was Facebook’s largest investment and will enable Facebook to control communication throughout the world.

The impact internationally will be most important and exciting to see. The WhatsApp team believes that neither cost nor distance should prevent people from connecting with their friends and family, which aligns with Facebook’s vision. Other tech companies will no doubt follow suit and fight to penetrate this now tapped market. Facebook has almost guaranteed that one of it’s apps will hold a place on every phone in the world.

Lastly, I wonder how the telecommunications industry will react. Facebook has entered into this industry where before they were only social media communication. It can now consider itself a competitor with the likes of Verizon, AT&T, and other mobile service providers.  Will Facebook be able to keep up? What is next, a Facebook mobile phone preloaded with it’s apps? Is connecting the mobile world worth $19 million? 

No comments:

Post a Comment