Feb. 20 - Global reach, ease of use, low cost, freedom from mobile carriers, not bound by platforms, and privacy are the features setting WhatsApp apart and making it worth $19 billion to Facebook. Conway G. Gittens reports.
What's up with WhatsApp? Why would Facebook, the most ubiquitous social network on the planet, pluck down $19 billion for a messaging service few have heard of in the U.S. No.1 - Because WhatsApp is very popular internationally. Facebook says the number of messages sent on the app rivals the total number of text messages sent globally. It has 450 million active users, and the company says it signs up 1 million new users a day. And in the world of social media - eyeballs are like gold, says Eric Setton, co-founder of rival messaging company Tango. SOUNDBITE: ERIC SETTON, CO-FOUNDER, TANGO (ENGLISH) SAYING: "Mobile messaging is so hot, because it is extremely disruptive. This is an app the people don't just install and forget about. It is something that they are checking 40 times a day, and I think that is extremely valuable. Combine to that the presence in emerging markets, where Facebook is not yet fully established and I think that makes it a very compelling offer for them." No. 2 - It's easy to use. No user name. No passwords. Which means if you have a smartphone, you can log on and you don't have to worry about ads slowing you down. Unlike rivals, there are no ads, no games, no e-commerce, no talking. Just mobile messaging. No. 3 - It's free - or relatively free. But that's where the math gets fuzzy when it comes to that $19 billion price tag. Max Wolff of ZT Wealth adds it all up. SOUNDBITE: MAX WOLFF, CHIEF ECONOMIST/CHIEF STRATEGIST, ZT WEALTH (ENGLISH) SAYING: "There's about seven billion people on Earth. If every single one of them signs up for WhatsApp, uses it for free for a year and then decides to pay 99-cents next year, it will take them $3 million to break even, without the present discounted value of the money factored to the inflation over time. So this is clearly not a fundamental decision. It's a defensive decision. Keep it away from Google. Keep it away from Apple and make sure you don't keep losing teens and keep losing engagement which is the existential threat for Facebook." No. 4 - WhatsApp doesn't mess with your phone bill or eat into text messaging plans, because it works over the Internet and not through your service provider. No. 5 - It works on all platforms, so you're not locked into Android, Apple's iOS or any other platforms. And finally, while Facebook and others track your every move - WhatsApp doesn't. Which means WhatsApp doesn't have to buy servers to store information or hire engineers to manage all your personal info it is not saving.