WhatsApp has destroyed the SMS based incomes of a number of telecom companies. It is one of the most successful instant messaging platforms linking millions around the globe. Started in June 2009, by two employees of Yahoo Brian Acton, and Jan Koum, the objective of the company was to provide a means for Apple's iPhone and RIM's Blackberry devices to communicate with one another. Soon it became available on other platforms such as Android, Java J2ME, Symbian etc.
Today WhatsApp delivers on an average 1 Billion messages each day. Users can share texts, locations, and media such as photos, videos and audio. What more can an instant messaging service provide!
It is doing to the instant messaging world what Skype did to telephony all around the world. Bringing the world together and doing it in a way that makes it cheap, effective, reliable and very cool.
Now all this got me thinking, how does WhatsApp make money, without advertisements, and since it is a freely downloadable application? I mean, what are the things that WhatsApp needs to run operations at such a scale (a study shows they crossed the 10 billion messages mark in 2010 and it stores user messaging history, data storage costs money and lots of it)? And the last question, how do they market themselves?
To find the answers I dug a little deeper.
And this is what I found.
1. WhatsApp employs only 20 engineers who work on the development of the application. The rest are involved in customer support. The exact number is unknown, but my guess would be around 20-50 people.
2. WhatsApp prides itself on working with extremely limited budgets, and hence, is extremely efficient. Brian Acton once himself said that in order to keep the venture profitable, it needed to operate with extremely tight budgets.
3. WhatsApp's website is worth $10 only! Which means they do not spend here, tight budgets? Yes, we get it.
4. WhatsApp is the #1 downloaded application on several application store platforms, such as Google Play, Apple iTunes, etc. And it does not spend a penny on advertising, again saving costs. They rely on word of mouth publicity, which is why probably in the European markets, where telecom companies used to make a killing by charging exorbitant rates on messaging services, (TSPs telecom service providers) ignored the presence of WhatsApp initially where downloads were in thousands, but surged to millions in a matter of one year making life difficult for TSPs who had to lay off people!
5. They recently got funding from investment companies to the tune of a cool $8million!
6. The cost of downloading WhatsApp on iTunes is only 99 cents, and on other platforms is available for free. But there is a catch, WhatsApp is free only for the first year. Second year onwards there is a fee for $1.99 for a period of 3 years, and this is where they are going to make money, no not make money, MINT money. Consider this, currently WhatsApp has over 100 million subscribers, and suppose 80 million are non-iOS users, they will earn a cool $160 million easily! What a genius marketing strategy!
7. They rely on their funding from donations, much like Wikipedia. Which keeps the company afloat despite high running costs.
Now the other set of questions which is what this blog is about. The future.
1. What will happen if some TSP buys out WhatsApp in the future?
2. What happens when there is a better Instant Messaging platform which comes to the market? Will it mean the death of WhatsApp?
3. Is advertisement free applications the way to the future?
Here are the answers I came up with, and I am open to discussions.
1. If WhatsApp is bought by a TSP, then, we will witness the DEATH of free instant messaging as we know it now. Not a pleasant possibility, but considering the way WhatsApp is operating now, we can be rest assured that like Wikipedia, WhatsApp will survive. For a long long time.
2. What happens when there is a better Instant Messaging solution available? Well, WhatsApp will die, unless it re-invents itself, but that again looks to be a distant possibility. I again refer to Wikipedia, which is still going strong, and there is no way, there can be another Wikipedia in the near future. So I feel WhatsApp is safe.
3. Advertisement free applications available for free Instant Messaging IS the way to the future. I mean, who wants to see an application being bombarded with advertisements, which in more cases than none, irritate users by slowing down the application, hogging bandwidths of data plans! So yes, advertisement free applications are here to stay, and if someone else comes up with a platform as unique as WhatsApp can and should emulate WhatsApp's strategies, for success is guaranteed!
I am a faithful WhatsApp user and I certainly do hope this trend continues!
Today WhatsApp delivers on an average 1 Billion messages each day. Users can share texts, locations, and media such as photos, videos and audio. What more can an instant messaging service provide!
It is doing to the instant messaging world what Skype did to telephony all around the world. Bringing the world together and doing it in a way that makes it cheap, effective, reliable and very cool.
Now all this got me thinking, how does WhatsApp make money, without advertisements, and since it is a freely downloadable application? I mean, what are the things that WhatsApp needs to run operations at such a scale (a study shows they crossed the 10 billion messages mark in 2010 and it stores user messaging history, data storage costs money and lots of it)? And the last question, how do they market themselves?
To find the answers I dug a little deeper.
And this is what I found.
1. WhatsApp employs only 20 engineers who work on the development of the application. The rest are involved in customer support. The exact number is unknown, but my guess would be around 20-50 people.
2. WhatsApp prides itself on working with extremely limited budgets, and hence, is extremely efficient. Brian Acton once himself said that in order to keep the venture profitable, it needed to operate with extremely tight budgets.
3. WhatsApp's website is worth $10 only! Which means they do not spend here, tight budgets? Yes, we get it.
4. WhatsApp is the #1 downloaded application on several application store platforms, such as Google Play, Apple iTunes, etc. And it does not spend a penny on advertising, again saving costs. They rely on word of mouth publicity, which is why probably in the European markets, where telecom companies used to make a killing by charging exorbitant rates on messaging services, (TSPs telecom service providers) ignored the presence of WhatsApp initially where downloads were in thousands, but surged to millions in a matter of one year making life difficult for TSPs who had to lay off people!
5. They recently got funding from investment companies to the tune of a cool $8million!
6. The cost of downloading WhatsApp on iTunes is only 99 cents, and on other platforms is available for free. But there is a catch, WhatsApp is free only for the first year. Second year onwards there is a fee for $1.99 for a period of 3 years, and this is where they are going to make money, no not make money, MINT money. Consider this, currently WhatsApp has over 100 million subscribers, and suppose 80 million are non-iOS users, they will earn a cool $160 million easily! What a genius marketing strategy!
7. They rely on their funding from donations, much like Wikipedia. Which keeps the company afloat despite high running costs.
Now the other set of questions which is what this blog is about. The future.
1. What will happen if some TSP buys out WhatsApp in the future?
2. What happens when there is a better Instant Messaging platform which comes to the market? Will it mean the death of WhatsApp?
3. Is advertisement free applications the way to the future?
Here are the answers I came up with, and I am open to discussions.
1. If WhatsApp is bought by a TSP, then, we will witness the DEATH of free instant messaging as we know it now. Not a pleasant possibility, but considering the way WhatsApp is operating now, we can be rest assured that like Wikipedia, WhatsApp will survive. For a long long time.
2. What happens when there is a better Instant Messaging solution available? Well, WhatsApp will die, unless it re-invents itself, but that again looks to be a distant possibility. I again refer to Wikipedia, which is still going strong, and there is no way, there can be another Wikipedia in the near future. So I feel WhatsApp is safe.
3. Advertisement free applications available for free Instant Messaging IS the way to the future. I mean, who wants to see an application being bombarded with advertisements, which in more cases than none, irritate users by slowing down the application, hogging bandwidths of data plans! So yes, advertisement free applications are here to stay, and if someone else comes up with a platform as unique as WhatsApp can and should emulate WhatsApp's strategies, for success is guaranteed!
I am a faithful WhatsApp user and I certainly do hope this trend continues!
