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Why Facebook’s acquisition of WhatsApp is a logical extension.


Mobile is disrupting the dominance of PC Web era companies. Online first companies are struggling to innovate in the mobile space, as many of them look at it as a mere extension to the PC Web, instead of leveraging it’s unique aspects. Many of the big players have realized this and have rapidly acquiring mobile first companies – for eg. Google acquired AdMob in 2009, while Apple bought Quattro Wireless in 2010 and Facebook acquiring Instagram 2012. The current generation of users is making the mobile their primary screen for living a connected life, so it comes as no surprise that companies are focusing their energies and investing top dollars to have the best mobile experience for their audience.

Facebook's overarching charter has hinged on 'connecting everyone' in the world. Interestingly, the global youth population, a very relevant demographic is slipping away and exploring other social apps outside of Facebook. Estimates show 62% of global teens claimed to be active on Facebook in Q2 2012, which dropped to 51% in Q2 2013, demonstrating that a vital audience is on the decline as far as Facebook is concerned.

On the other hand, Whatsapp is the most successful and fastest growing social communication app. If you compare the growth rate over the first four years, Whatsapp also has the sharpest growth trajectory as compared to other social communication platforms such as Skype, Twitter, Gmail, Facebook etc. Over 450 million people are using Whatsapp every month, and 70% of them are active on any given day. This makes Whatsapp, a strong logical extension to Facebook's 'connecting the world' goal, by helping them develop new mobile experiences which until recently was restricted to the Facebook app.

It will be interesting to see if Whatsapp moves away from its subscription model and adopts advertising. After all, in effect, Facebook is going to be able to have access to 450 million verified mobile numbers, many of whom may not even be on the Facebook app. Additionally with Google pushing Hangouts as a default mobile messaging app, Facebook was forced into doing something in the mobile messaging space and this was the best way to capture that market. This presents a distinctive opportunity for Facebook to garner increased user engagement and a greater fillip to their mobile strategy.

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