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Why do you think Facebook bought Whatsapp and Instagram?

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Question added by Dana Qaisi , Social Media Specialist , N/A
Date Posted: 2017/02/27
Jeyaseelan Jeewarathnam
by Jeyaseelan Jeewarathnam , Digital Marketing Manager , Mass Spreadz Pvt Ltd

  • WhatsApp has both offensive and defensive value to Facebook. WhatsApp is the fastest-growing company in history (in terms of users). If the company's growth continues, and it can continue to "monetize" its users, it will be worth an even more mind-boggling amount of money someday. At the same time, WhatsApp's growth is gobbling up user messaging and connection time that once could have belonged to Facebook. Now those users and their time do belong to Facebook. So buying WhatsApp allows Facebook to both own "the next Facebook" and prevent "the next Facebook" from eating Facebook's lunch.
  • WhatsApp's growth and usage is absolutely mind-boggling. Five years after its founding, the company has 450 million active monthly users, of which a staggering ~315 million use it every day. WhatsApp is adding 1 million new users a day — 1 million! Facebook thinks WhatsApp could have 1 billion users in a few years, and this estimate seems conservative. (Facebook itself only has 1.2 billion users.) WhatsApp also does a lot more than "text-messaging." It allows users to send photos, videos, and voicemails to each other. In short, it allows users to do a lot of what Facebook does. So, again, Facebook really does appear to be buying "the next Facebook."
  • WhatsApp already has a powerful revenue model, and other successful messaging apps are showing the potential for it to add many more. WhatsApp ostensibly charges its users $1 per year after the first year. ("Ostensibly" because I've never heard of anyone actually paying this $1). Assuming most current users end up paying the $1/year, that's a potential revenue stream of several hundred million dollars a year from WhatsApp's current revenue model alone. Meanwhile, other messaging apps like Line and WeChat have demonstrated the power of "stickers," user-to-user payments, ecommerce, and other revenue streams. When you have as many users as WhatsApp, generating even only a few dollars per year per user creates a massive business.
  • WhatsApp has very low costs, so it should eventually be wildly profitable.WhatsApp currently has only 55 employees. Assuming an all-in cost of $200,000 per employee, that's a total cost base of $11 million. Let's assume WhatsApp grows to, say, 300 employees over the next few years. Then it will have a cost base of only $50-$75 million. Meanwhile, if the company's growth trajectory continues, it could easily be pulling in more than $1 billion a year of revenue in a few years. Almost all of that would be profit.
  • The names of all the smart people who pronounced Facebook itself a "fad" or "worthless" and dissed every new investment in the company as "moronic" could fill a book. Most people have consistently underestimated the power, growth potential, and value of the leading social platforms, including Facebook. Facebook's $1 billion acquisition of Instagram, for example, which was then a revenueless company with 13 employees, was seen as proof that Mark Zuckerberg was a clueless kid who had no business running a major company. Meanwhile, Facebook is now valued at $175 billion, and Instagram is considered one of the smartest preemptive acquisitions in history. Nineteen billion dollars for WhatsApp is a much bolder bet than Instagram, but it, too, could end up looking a lot smarter than most people think.

Yes, but is WhatsApp really worth $19 billion?

The short answer is: No one knows. There are some financial scenarios in which WhatsApp could end up being "worth" (in a limited financial sense) a lot more than $19 billion. There are other scenarios in which it could end up being worth a lot less. The only answerable question right now is whether WhatsApp was worth $19 billion to Facebook.

And I think the answer is yes.

The bottom line:

This is a very bold move.

Like other bold moves, it might end up looking stupid, but it also might end up looking brilliant. 

It's also a long-term move, a bet on what the future will look like five to 10 years from now, not next quarter.

In that way, this deal is a vintage Mark Zuckerberg move.

Zuckerberg continues to be one of the few CEOs (Jeff Bezos is another) who is willing to sacrifice near-term earnings and expose himself to short-term ridicule in order to make bold long-term bets. This approach has worked out great for Amazon And it has worked out great for Facebook so far. 

In short, Facebook buying WhatsApp for $19 billion isn't stupid. It's just bold.

Ysf Ds
by Ysf Ds , Recruitment assistant (Acting Recruitment officer) , GOAL Regional (HUBS)office in Jordan (INGO)

to gian more customer and make the company stronger

hazar alloush
by hazar alloush , Producer assistant , Doors company

To gain more customers 

and open up the accounts to each other easily by sharing it 

akila fernando
by akila fernando , Banking Executive , HSBC

to gain more customers. Because most people are on Facebook to look at other people's photos. instagram would make that easier for new customer base. 

Nandini Valsan
by Nandini Valsan , Media Content Provider , Raising Our Voices Foundation

While FB operates through the Internet, Whatsapp connects its users through their phone connections. Thus FB, through buying Whatsapp, managed to gain access to this entire new customer base. Instagram on the other hand had gained in popularity with its ability to target the customers who prefered an interface that was purely visual. Again, Instagram is predominantly a cell phone based app, and FB, by taking it over, has performed a coup of sorts.

Joselito Espijon
by Joselito Espijon , HES Safety Officer , Modern Arab Construction Co ltd

To have an accurate profile and communication

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