Still Pondering the WhatsApp Deal by Facebook
Looking into Facebook’s giant payment for WhatsApp continues to occupy my attention, and maybe I understand it a little more today than yesterday. http://blogs.wsj.com/digits/2014/02/21/whatsapp-ceo-on-facebook-deal-its-about-staying-independent/?KEYWORDS=whatsapp
Surveying the leading message services across the planet, many have added a few bells & whistles such as games, shopping, or extra communication functions. But not WhatsApp! Instead, WhatsApp offers very simple text messaging for the low price of $1.00 per year. As a result, it has attracted nearly half a billion users in the developing economies of Asia, South America, and to a limited degree Africa. http://www.reuters.com/article/2014/02/21/us-whatsapp-facebook-idUSBREA1K0U120140221
That brings into focus the reason for the $19B price to be paid by Facebook. Who would FB want to prevent from future competition? The obvious candidates: Google, Apple, and maybe Amazon and Microsoft. By essentially buying half a billion customers in the largest market on earth, Facebook has strategically placed itself in the emerging markets on the bet that half a billion will turn into three or five billion within a decade. That means Facebook will grow into a dominant, if not the dominant, player in the social net business of the next decade. http://www.forbes.com/sites/hollymagister/2014/02/21/whatsapp-19-billion-secret-formula/
Too forward looking? Too strategic? Maybe, but it fits the present data to explain why the huge price tag for a rather ho-hum text messaging service. http://www.afp.com/en/node/1277993
That’s the view from analysts at http://HamiltonFinanceServices.com, but what do you think?
hamilton.jerry
