Why Facebook-WhatsApp Deal Makes Sense For India
Facebook has finally wrapped up its landmark $19 billion acquisition (with a final price of about $22 billion) of the mobile messaging service WhatsApp on Tuesday, an announcement which it had made in February. The acquisition that is expected to strengthen Facebook’s position in mobile messaging, can be a boon for emerging countries such as India, Brazil and Indonesia where mobile is becoming a lifeline for communication.
Needless to say, WhatsApp is the most globally diverse messaging service, with more than 600 million monthly active users from Europe to South America to Asia. While announcing the deal, Facebook head Mark Zuckerberg mentioned on his FB wall, “Our mission is to make the world more open and connected.”
With that statement, Zuckerberg was aiming at expanding its footprints in emerging markets of Latin America and Asia, especially India, where mobile instant messaging app is hot.
The India factor
In India, especially, a country with over a 110 million mobile internet population and where most online users access the internet mainly through their mobile phones, the deal makes a lot of sense, believe experts. According to a TRAI estimate, Facebook has over 100 million active users in India, 70% of them are mobile users. As WhatsApp’s estimated 30-35 million Indian mobile users will add to it now, it will lead to about 40% access social network on mobile devices.
WhatsApp has also become the top driver for smartphone penetration in India, and this could be a boon in the process. Moreover, as a study by eMarketer notes that by 2016, India will overtake the US as the biggest market forFacebook, and cheaper smartphones and Facebook-enabled feature phones likely to flood the market in the coming months, Vidya Nath, Director, Digital Media, GIC, Frost & Sullivan points out there could be no better time to cash in onto this opportunity.
Nath states that majority of users on WhatsApp are young and Facebook has been eager to tap into this area, where it was losing out on. This move therefore will helpFacebook tap youngsters who were abstaining from the mainstream social networks and shifting to social messaging.
While the closing of the deal happened in a short time, Facebook is already partnering with mobile companies to have Facebook Messengers built-in. Many believe the mobile messaging ambition of Facebook can be a strong indicator that its curtain calls for traditional SMS.
Not without challenges
Even though India is a big bet for Facebook and the WhatsApp acquisition can prove to be very lucrative for the social media giant, experts believe it needs to rethink its strategies for the rest of the Asian market, especially China.
In Asia, Facebook’s so called home turf, the big, is increasingly seeing a growing social-media market on mobile. For example, Line in Japan, Hong Kong and Singapore, WeChat in China and Kakao in Korea, can be a tough nut to crack for Facebook.
On a positive note however, a a recent WSJ report states, WhatsApp is gaining immense popularity in many of these markets. For example, while in China, Facebook is largely unavailable, WhatsApp isn’t blocked. This can offer a potential new channel for Facebook to compete in the world’s largest smartphone market, says the report.
As As Praveen Bhadada, Director, Market Expansion, Zinnov Management Consulting notes that Facebook’s acquisition of WhatsApp has a strategic significance for the fast evolving mobile world, especially in India.
“Facebook It is an endorsement in many ways that the future of communication lies in mobile. It will be interesting to see how Facebook defines the monetization models across emerging markets and geographies in the days to come,” Bhadada says.
Touted as Facebook’s biggest ever deal and one of the most significant deals in the history of technology, the deal will also be an eye-opener to others looking to conquer the emerging markets. As business consulting firm EY notes, more headline-grabbingacquisitions are likely over the coming year as businesses take advantage of a period of improving economic growth and cheap financing.
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