Facebook Buys WhatsApp for $19B

Facebook announced today that it is buying WhatsApp, a mobile messaging service that is used by over 450 million people. WhatsApp allows you to exchange messages without having to pay for SMS.

In addition to text messaging,WhatsApp allows users to send each other images, video, and audio media messages as well as their location using integrated mapping features.

WhatsApp founder Jan Koum signed the $19 billion Facebook deal paperwork on the door of his old welfare office in Mountain View, Calif. The deal includes $4 billion in cash, $12 billion worth of Facebook shares and an additional $3 billion in restricted stock units for WhatApp’s founders and employees.

WhatsApp will complement Facebook’s existing chat and messaging services. Facebook Messenger is widely used for chatting with Facebook friends, while WhatsApp can communicate with all of your contacts and groups of people.

WhatsApp competes with other messaging services, as well as Apple’s iMessage, Google’s Hangouts and Microsoft’s Skype.

SMS is the world’s most widely used data application, with an estimated 3.5 billion active users, or about 80% of all mobile phone subscribers at the end of 2010, according to Wikipedia.

There are an estimated 1 billion OTT IM apps users around the world. Many are likely to have multiple apps installed on their smartphone.

From a total worldwide base of 1.2 billion smartphone users, 1 billion Instant Messaging app users makes this category very important.

Facebook bought Instagram, the popular photo-sharing application, for $1 Billion in 2012, while Snapchat rejected Facebook’s $3 billion acquisition offer in 2013.

But free messaging (and calling) services have cut into wireless carriers’ own voice and messaging revenues, of course, which were almost pure profit.

Posted by Sam Churchill on .

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