Why is Facebook on crack for paying $19 billion for WhatsApp? The answer is simple; they’re not. Once you get past the sticker shock, you will begin to see why this is a highly strategic move.
WhatsApp is a multiplatform, instant messaging application designed for use on mobile devices. This application allows users to send multimedia messages globally without being charged by their mobile carrier. Anything from text messages to video messages to audio messages to pictures messages can be sent for free using this highly popular app.
WhatsApp’s Popularity is Continuing to Grow
WhatsApp currently has around 450 million users. That’s 90 million users for every year since the app came out in 2009. The release of Facebook Messenger was not received well by the general public. With the popularity of WhatsApp continuing to boom, Facebook took the necessary action: buy them. In a single day, WhatsApp is used by 70% of their 450 million users. In that same day, 19 billion texts are sent, 600 million photos are shared, 200 million audio messages are shared, and 100 million video messages are shared.
These numbers make WhatsApp the leading app in mobile communication. Why not merge the leading application/social media site with the leading app in mobile communication? That’s exactly what Facebook did. Facebook averted the possibility of WhatsApp becoming the social media super site by stepping up and purchasing it outright. This multi-billion-dollar purchase will hopefully give Facebook the upper hand for years and years to come.
A Risk Worth Taking
What are the downfalls to making such a big investment? Much like any investment, there is always a little bit of risk involved. With high risk comes the opportunity for high reward. Facebook passed up on buying out WhatsApp in 2009 when it first came out; now, five years later, they were posed with the same opportunity. This time, they did not pass it up, but they definitely paid dearly for it. What if the WhatsApp craze dies down? This is the risk that the Facebook CEO is willing to take. At five straight years of consistent revenue and popularity increase, WhatsApp seemed like a great idea.
An application that wraps all aspects of mobile communication into one is genius. We’ve seen applications like Snapchat, Twitter, and Skype absolutely skyrocket in popularity over the past several years. WhatsApp combines all of those into one simple and free application. Facebook foresees their social media hierarchy taking a turn for the best with the new acquisition of WhatsApp.
One of the Smartest Purchases in the Last Decade
So, is Facebook really on crack for spending $19 billion on WhatsApp? The answer is no. Facebook saw a golden opportunity that had already, at one point, passed them up. This golden opportunity has the potential to increase their popularity and revenue further than the eye can see. Analysts on Wall Street deem this purchase one of the smartest purchases in the last decade. With the media backing up Facebook’s decision, this gives them the opportunity to grow exponentially for years to come.