My Thoughts on Technology and Jamaica: Facebook acquires WhatsApp for US$19 Billion - CEO Jan Koum promises no advertising

Thursday, February 20, 2014

Facebook acquires WhatsApp for US$19 Billion - CEO Jan Koum promises no advertising

“You can continue to use WhatsApp no matter where in the world you are, or what smartphone you're using. And you can still count on absolutely no ads interrupting your communication. There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product”

Founder and CEO Jan Koum on her personal blog reassuring WhatsApp members that Advertising will not become a part of WhatsApp

Facebook has just purchased the five year old company WhatsApp for a whopping US$19 Billion, apparently impressed (or Fearful) of the phenomenal rate of Growth of this Mobile Social Network as stated in “Facebook to acquire WhatsApp for $16B”, published February 19, 2014 2:11 PM PST by Jennifer Van Grove, CNET News

Either that or Facebook must have read my blog article predicting their death at the hands of a Mobile Social Network and decided not to take any chances of being beaten by WhatsApp’s as predicted in my blog article entitled “WhatsApp is now one-third the size of Facebook - Mobile Social Messaging American Hustler faces competition from the Rising Tide of Blackberry Messenger as they Herald Facebook's Death”.

However you spin it, this news has many shocked and clutching their smartphones as if they had a smartphone-heart attack as noted in “Facebook to buy WhatsApp for $19 billion in deal shocker”, published Thu Feb 20, 2014 3:36am EST BY GERRY SHIH AND SARAH MCBRIDE, Reuters.

Whatever the reason, US$19 billion is a lot of cheese, and it’s not even Easter yet! For Founder and CEO Jan Koum, who symbolically signed the Agreement for Sale at the door of his old Welfare Office, this is great moment of triumph for the Russian immigrant whose immigration story should inspire legions of Immigrant Engineers to focus on their ideas and not be sidetracked as chronicled in “Exclusive: The Rags-To-Riches Tale Of How Jan Koum Built WhatsApp Into Facebook's New $19 Billion Baby”, published 2/19/2014 @ 7:58PM by Parmy Olson, Forbes.

From February 1, 2014
That’s not a typo by the way, folks, just missing info in the CNET News article; the payment made by the Big Blue Social Network to the “Green Hornet” Mobile Social Network is detailed in the SEC (Security Exchange Commission) filing as reported in “Facebook buys WhatsApp for $19 billion – yes, billion”, published February 19, 2014 By Andrew Couts, DigitalTrends as follows:

1.      US$4 billion in cash
2.      US$12 billion worth of Facebook stock up front

3.      US$3 billion in Facebook shares from 2014 to 2018 to WhatsApp’s founders and employees US$19 billion total ponied up to acquire WhatsApp

This is a lot more than the equally shocking amount that Facebook spend to acquire Instagram, which was US$1 billion. Still, Facebook’s spend is an expression of confidence in the performance of fledgling Mobile Social Network, which at the time of the acquisition was approximately 1/3 of Facebook’s size and boasts some impressive metrics as reported in “Facebook score a bargain with $16B acquisition of WhatsApp?”, published February 19, 2014 5:30 PM PST by Steven Musil, CNET News:

1.      450 million MAU (monthly active users) globally
2.      320 million DAU (daily active users)
3.      70 percent daily user engagement
4.      19 billion messages sent per day
5.      34 billion messages received per day
6.      600 million Photos uploaded daily
7.      200 Million Voice Messages sent daily
8.      100 million Video Messages sent daily

SMS (Short Messaging Service), despite its iniquitousness, is slowing globally, now down to  21 billion per day projected by Gigaom Malik OM in my blog article entitled “CTIA reports a 5% decline in US Texting as Instant Messaging ramps up - WhatsApp's now Top Gun as The Dead Zone leads Star Trek Into the Darkness”. As more persons switch to smartphones, IM (Instant Messaging) Platform usage explodes and services such as Kik, Snapchat, Whisper, BBM, Viber and WhatsApp are riding this wave.

As SMS’s growth slows with the Rising Tide of IM (Instant Messaging) a jewel in the crown of Mobile Social Networks, Facebook hopes to ride this way via WhatsApp acquisition, which allows them to provide a low-cost alternative to SMS to quote Facebook CEO Mark Zuckerberg: “As Facebook works to connect the entire world and build the infrastructure for a global community, WhatsApp will clearly help accelerate our progress. People use WhatApp as a replacement for SMS”.

Facebook panicked and brought WhatsApp – BBM and Google+ Coming to finish them off by 2016

Albeit comparing Apples to Oranges is never advisable, it’s still worth noting that these numbers for the Mobile Social Network WhatsApp best Facebook’s as noted in my blog article entitled “Facebook continues to grow despite challenges from Mobile Social Network - Facebook is Growing Strong like House Tyrell in Game of Thrones” and my Geezam blog article entitled “Facebook is Growing Strong with 1.15 Billion Active users in the Second Quarter of 2013”, which is still for the most part a Desktop based Social Network.

Good to note that despite the Engineering rhetoric of WhatsApp’s Founder and CEO Jan Koum in the article “WhatsApp: Don't sweat, Facebook buy won't change us”, published February 19, 2014 2:42 PM PST by Roger Cheng, CNET News and on Facebook, published February 19, 2014 by Jan Koum, WhatsApp, an advertising model IS IN THE WORKS, as Mobile Social Networks have to monetize to make revenue from all that Traffic.

The value place on WhatsApp is a “fear Value” not a fair one; Facebook is afraid that they’ll be made into dinosaurs by this younger, faster growing rival, so they just bought them out, plain and simple. No different from any company buying a rival with new technology fearing that they’ll upset their Apple Cart with some new Technology. Especially as the dead skeletons of past Social Networks such as MySpace, Friendser and Hi5 that failed to make the transition to Mobile Platforms still gives Facebook CEO Mark Zuckerberg nightmares!

So monetization via Advertising will definitely be the first change Facebook’s gonna make to WhatsApp. Same’s true for Snapchat, Kik and even the super anonymous Whisper as I’d chronicled in my blog article entitled “Whisper, the Anonymous Secret Sharing Social Mobile Network - Confession of Awkward Moment being revealed fuelled by the desire to Bare your Soul to Strangers”; they too are all working on monetization models that involve advertizing, or the possible resale of Statistical Metrics or even personal Data to Advertisers.

Also good to note that albeit this may get FB a bigger foot in the Mobile Social Network Game and thereby take over the world as noted in “Facebook's new 10-year plan? SMS -- aka WhatsApp”, published February 19, 2014 5:04 PM PST by Jennifer Van Grove, CNET News, they still have to contend with the two Big Elephants in the Room: BBM and Google+.

BBM currently has a phenomenal rate of adoption ever since it was let loose from Blackberry as I’d reported in my Geezam blog article “WhatsApp popularity fading as BBM’s the most downloaded IM App on iOS” and my blog article entitled Blackberry Messenger is Most Downloaded in November 2013 and is poised to beat WhatsApp - BBM is now on the Rising Tide of the Mobile Social Messaging Network Summer of Love”, besting even WhatsApp during November 2013 in terms of downloads on Apple iOS. 

BBM 2.0 is now out since Thursday February 13th 2014 and features Free VoIP Calling and Dropbox Integration, something that WhatsApp doesn’t have as reported in my blog article entitled “BBM 2.0 now with Voice and Dropbox Integration – WhatsApp beaten for sure as Free File Sharing and Voice Calling result in BBM Transcendence on Android and iOS”. WhatsApp has now begun charging US$0.99 per year for both Google Android and Apple iOS users after 1 year’s usage.

Google+ is coming to kick Facebook to the curb, based on the stats of their usage collated in my blog article entitled “Google+ is expanding rapidly and is set to beat Facebook by 2016 - Batman the Dark Knight Rises as the new Social Network King” and my Geezam blog article entitled “Winter is Coming as Google+ is on a collision course to beat Facebook by 2016”. So stay tuned for the real fireworks come 2016, as Mobile Social Networks in the form of BBM and Google+ gather momentum.

Facebook needs to saddle up this new horse with some advertising and quick! The revelry of the US$19 billion purchase will fade quickly when their acquisition starts to misfire against BBM and Google+, Guardians of the Galaxy (2014) of Mobile Social Networks.

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