WhatsBook? FaceApp?

WhatsApp (technobuffalo.com)

Hottest piece of tech news in the month of February 2014, is none other than the acquisition of WhatsApp by Facebook for a whopping USD $19 billion, paid in cash ($4 billion) and stock ($12 billion and $3 billion restricted stock), over several years. Now, most of us probably wonder why the acquisition? But hey, we may not see what Facebook sees in WhatsApp, don’t be too quick to judge.

First, no one will purchase something at such an astronomical amount and not planning to have a return, be it short-term or long-term, in this case, probably long-term. So, how do you make sure you have a return on the investment? WhatsApp, is just another messaging app. Yes, I said it ‘just another’, no doubt it was the first of its kind when it was launched, text someone miles away for free, soon transformed into photo sharing app etc. But, for just 99 cents, how do you monetize $19 billion? Now that WeChat, KakaoTalk, and Line offers so much more than WhatsApp. Recently Line was in the news as they made $338 million in 2013, that figure has been growing steadily, and no sign of slowing down at all. So, what is WhatsApp business model? There is no recurring spending from the users… Not saying that purchasing WhatsApp is bad move, just that purchasing the other messaging apps would make better sense to me…

Next, just because you have a huge audience, does not mean you will be the most profitable. WhatsApp does not have ads in it, which is awesome. Ads are annoying as hell, but they are a source of profit. So, that is one money maker mechanism that is not being utilized. So, the interesting thing would be to see how Facebook would use the wide spectrum of audience that WhatsApp already has, and turn it into a cash making subsidiary of Facebook Inc. My guess? Apps will be integrated with social media, as Facebook is still the biggest money maker. When I say integrated, I mean a streamlined user data. Phone numbers, mobile usage habits etc.

The tech industry evolves so quickly, and before the technology being snatched up by competitor, why not acquire it first? Avoid the patent trolls…

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