A dollar a year1 that is the amount WhatsApp is charging some of it’s user. By now you must have heard of the crazy valuation that Facebook paid for WhatsApp2, and to some – especially those in the tech scene you might already be jaded by this news.
I too read a lot too about this news and there are many opinions on it. But before you decide to close this window, I would like to ask for two minutes of your time and give my analyst persona ahLee a chance as he bravely attempt to answer this statement “Facebook wants to be your online NRIC3“ and buying WhatsApp is just one of the step forward.
Remember this button (Login via Facebook), when you login to a site with this button, it helps Facebook to keep track of your activities even when you are not using the Facebook itself. I believe this sets the footprint that Facebook wants to be your online identity.
This article by Tarun from Forbes clearly articulate my stand too:
Like Google, Facebook is becoming a collection of apps and services instead of a single website. Just as Google has used the Google+ social network as a tool for consolidating personal information, Facebook has been singularly focused on becoming your online identity. What you say and do in one place is sure to be analyzed for use in another … via The Disappointing Contradictions Of WhatsApp Being Acquired By Facebook
But what if users are leaving?
In The 2014 Facebook Demographic Report by istrategylabs. It highlights that teens are leaving Facebook while on the other hand the more mature generations are coming onto Facebook. So now Facebook loses the social signals from the teens and gain the social signals from the mature generations, the question is how else to gather back all those lost information.
One of the theory that Sarah Lacy believes why Facebook buys WhatsApp
Another theory is Facebook’s much discussed teen problem. While WhatsApp users are likely younger, you have to be 16 to sign up, versus 13 on Snapchat or Facebook. And teens are notoriously fickle. Paying 10 percent market share just to get an audience that may migrate tomorrow makes Zynga’s $210 million purchase of OMGPop look well thought out. via Follow the photos: The real reason Facebook just paid almost 10% of its market cap for WhatsApp
Buy the service where your users are going
A solution is by buying out the service that attracts the teen. For example: Facebook buys Instagram for $1Bn in 2012 and now WhatsApp for $19Bn, (ahLee is speculating here) if Facebook can use data from both of these services and try to bring a connection to it’s Facebook profile, maybe it would further improve the personalise ads on Facebook.
Furthermore, the messages on WhatsApp are very much different from the status shared online. On Facebook it is like shouting to the public, but on WhatsApp, many times it’s much more personal and so are the photos. It’s hard to say that in the future, when it comes to predicting your next move or (ads to show you) Facebook might be as good as Google4.
So in the next 5 year, I do not see Facebook becoming the next Myspace. In fact, it might catch up with Google with it’s graph search – and as the saying goes If You’re Not Paying for It; You’re the Product
In fact, I used to be a bear on Facebook stock but after these few years and watching how Mark Zuckerberg leads the company, now I’m turning Bull. He is aggressive and when he says it he mean it. He said he will focus on mobile and turn the company to profitably, he did it.
ahLee – your arm chair analyst
image credit: Login via Facebook by Silas Godfrey
- WhatsApp to bring subscription model to iOS this year ↩
- Whatsapp and $19bn – to be exact it is ($4bn cash, $12bn stock at current prices) and $3bn in RSUs, which brings a total to $19bn ↩
- National Registration Identity Card ↩
- “Real names are more valuable to advertisers” via Google wants to own your online identity ↩
- A tweet means a lot to me, it means that someone is appreciating my article and it keeps me motivated 😀 ↩