The key take away from this article is not to build your app in J2ME but to recognize how big the world is outside of America. American focused startups face lots of competition in a relatively small market.
And Android has like 80 percent market share outside of US. So maybe it's time for developers here and elsewhere to forget about the "Macs/iPhones 'everywhere', therefore let's build for them first" Silicon Valley culture, and start developing for Android first?
With J2ME phones rapidly declining as they are being replaced by smartphones (even $50 Android smartphones going into this year), and the vast majority of those smartphones being Android (even Microsoft is considering replacing Nokia Asha's OS with Android, therefore killing another a huge chunk of the J2ME market), Android's platform is basically the "new J2ME". So to follow the author's own advice, you should build an Android app.
The choice of platform should be made based on the value proposition. In the case of whatsapp, the business is based on undercutting the price-gouging of SMS with a superior alternative for $1 per year. This makes it affordable and appealing to everyone, including (especially) J2ME and Android users in the developing word.
If your app fits this profile, definitely go Android first.
But.. if your app is more appealing to people with discretionary income, you are shooting yourself in the foot if you don't start with iOS because that's where the users with money are.
The US is a pretty big market. 320,000,000 people, most with at least some disposable income. There are also plenty of advertisers that want to market their products to Americans, which means you can choose between ad-sponsored or for-pay business models.
There are also plenty of companies targeting the US market. The rest of the world? Not so much.
To give you an example: there is no reddit equivalent in French. The closest things we have are a few French-speaking subreddits that have very few subscribers since reddit scares people who don't speak English before they can reach the French-speaking subreddits. We also have a few very poor quality reddit rip-offs with no users.
Granted, the French-speaking world is not as big as the US market. But 100 million people is already a decent target, don't you think?
Funny story about that. We (reddit) had a long debate about what the default UI and content should be back when we internationalized (2008 I think?). Should we use the Accept-Language header to select both the UI and the content, or just the UI? We started by making the assumption that if your preferred language was French, for example, you'd want French content.
We got a ton of feedback from French speakers that they preferred the English content, so we ended up settling on selecting a UI based on the A-L header but giving the default English content (unless you specifically set it otherwise).
That's interesting. I think your decision makes sense, since your french users all speak English and you have much more content in English. In fact it personally irks me when I see reddit's UI in French (for example when I'm not logged in) because I'd rather have the whole site in English than parts of it in French.
In any case I think that if you really wanted to target the French-speaking population, it would be best to have a separate site or at least a clearly separated part of the site.
If it's user-created content, then it has a serious network effect - for the smaller communities, they will often prefer larger(=~better) english content to a smaller pool of their local content.
It would be a different story if the content available was comparable, but it usually isn't.
Just to give you an idea of how underserved the French market is, here's the closest French equivalent I've found to Hacker News: http://news.humancoders.com/ On a busy day, front-page stories get maybe 2 or 4 upvotes. If there's anything better out there, I haven't found it.
The French consumer market has tons of holes like this. And we're talking about a huge, wealthy market with plenty of mobile devices and solid broadband. It's not a wide-open market, but there are tons of opportunities.
I'm hearing more and more about French startup accelerators, and I'm seeing a lot more seed-stage startups. So people are making an effort to serve this market. But there's still a lot of opportunities.
Minitel adoption was never as big as with the current Internet, and users didn't suddenly migrate from one to the other. Minitel mostly bled to death as the Internet grew in popularity.
Minitel killer app was the yellow pages.
The other predominant usages were mail order and sex chats/porn. Some games too but nothing significant and nothing social, at scale at least.
That's surprising since Reddit at least translates their site into every language - how many times have you googled something and gotten back a reddit hit for an English language reddit page but with Portuguese UI? so reddit has done more than many to internationalize their site.
Probably a strip of language names along the top, taking you to language-filtered frpnt-pages would help. It would be ugly, but it's Reddit.
Subreddits have a "language" setting, although the data is probably dirty since the value is unused AFAIK - for all we know /r/pics is currently set on "Klingon". The Reddit admins would probably have to do some manual dirty-work, but iirc the "default subs/front page" reddit listing is somewhat manually curated anyways.
either way, if you stick to the idea of an entirely french version, fr.reddit.com/r/football will lead you to the american football subreddit, but for a french guy they would expect soccer to be there...
It's still gread that they provided a multilingual UI, but as a whole, us companies could always use to understand the foreign market a little bit better than just providing a UI translation...
This. India is a billion people and maybe 10-20% have internet access. Of those 10-20%, the vast majority do NOT have $20k to spend ($20k is the average consumption level of the poorest Americans). China and the Philippines are certainly richer, but not drastically so.
Rough numbers: USA is a $16T economy, most of which is on the internet. China is an $8T economy, most of which is not. India is $1.8T.
There is certainly opportunity here, particularly in the long term (probably why Facebook bought them), which is why I'm in India introducing people to BayesianWitch. But be realistic about the market.
The EU is a $16.5T economy, most of it on the internet, vastly underserved by internet companies compared to the U.S. Even Facebook was English only until 2008. Big business opportunities are being missed there.
The smorgasbord of languages and cultures makes it harder to target though. But German, French and Spanish markets are big in their own right, especially if you consider you can reach other territories with them as well. (Austria, Switzerland and to some extent eastern Europe with German; Canada and much of connected Africa with French; Phillipines and Latin America with Spanish.)
You won't find many Spanish speakers among the younger generation in the Philippines, and that's your target market. You'd be better off using English or Taglish for the Philippines.
And most of the most appealing-to-business sub-populations in a lot of these countries read english well enough that an English-language product captures a lot of them.
Please, the EU is made up of individual countries with individual languages with individual histories and cultures. Comparing it to the US is ridiculous.
Internet penetration in India is at the lower end of your estimate - 124 million in 2012 (1).
In contrast, the wireless subscriber base was 875 million in 2013 (2).
Source:
1. “Reimagining India: Unlocking the Potential of Asia's Next Superpower” by McKinsey; Published 2013
2. TRAI: Highlights on Telecom Subscription Data as on 31st October, 2013
This is also why Brazil is heating up so much in terms of start-up interest. It has a large population speaking the same language with significant income and a single government. And its government tends to be somewhat less nervous making (at least in some regards) than China's.
I think the attraction of the US market is that is big AND homogeneous: the EU in its entirety for example has more people and comparable wealth, but it's made up of dozens of countries, each with its own language and regulatory laws, which complicate the development of any app/service.
The laws are actually quite uniform, it's actually easy to release an app in multiple languages using one company in the UK, for example.
The hard part is getting partners or marketers everywhere, making sure they understand what you're trying to accomplish, making sure they don't rip you off and start their own clone with all your users and somehow providing support for all those people speaking different languages.
And of course, then there's the payments - receiving/sending payments is very hard, every country has their own preferred method that does not integrate with others at all.
I believe he means homogeneous as in "speak the same language, share a similar culture". If you tell a French person he's exactly the same as a German person, he will probably disagree.
One such "platform" is made up of the 80% of android phones that are cheap and basic with small data plans and limited access to slow wifi.
The anecdotes from the 80s & 90s when annual PC sales for any given year were a substantial portion of the overall PCs in use at the time are interesting. The realization that software could be written for the newest machine and it would run everywhere soon enough is not directly applicable to the smartphone market. I think that out of collective habit, many apps assume that building for this year's flagship models is the best course. It may be, but it effectively means your market is much smaller, especially for free, network effect apps.
These apps and their ecosystems rise and fall fast. Tablets & smartphones are spreading downmarket with devices being sold today @ 10% of the first androids.
A $50 phone won't run everything, but it will run some things - useful things.
It depends on your revenue model. If you want to charge for the app (or make money via IAP) then newer devices are better, since those users are the ones that spend most of the actual money. If you're relying on network effects and giving it away then you have to hit everything.
The really fun thing about WhatsApp is that it is essentially a product for the developing world, and to make money doing that you have to be seriously efficient.
i m using lenovo a 269i android 2.3.6 .it does do lot of thing for 50 phone.i no need high end graphic card.it just a phone which i can call. whatsapp and gps.enough for me.
the 80% of android phones that are cheap and basic with small data plans and limited access to slow wifi
Ignoring the fictional statistics, the cheap devices (e.g. Xiaomi) in countries like China still tend to be surprisingly powerful, and you hardly need to design down to them. And it's a rare app, beyond something like video conferencing, that puts any real burden on connectivity.
It is pretty much fictional, or rather arbitrary because you can draw the line between low and high end wherever you want. I actually got it from here:
And it turns out I misrepresented the fictional statistic. The "real" number is 66%. Though I suppose if you count older mid tier models (this counts sales) still in use, 80% might be pretty close.
IMO you still need to design dow a bit, especially for data poor users. Also smaller screens. In some cases I think craigslist is the thing to emulate.
While I don't normally agree with dismissing something from the source -- in this case Apple Insider -- the way that the article digs to try to generate their manufactured numbers borders on comical. Secondly, the metric that it is "junk" (the article's word) because the ASP is $200+ is asinine, if you will. As is the notion that such makes it a "feature phone" (where ASPs were in the LOW double digits).
A $200 device in many Asian markets is a decidedly premium device. The Xiaomi Redmi, for instance, is a $139 (retail!) decidedly decent mid-range device. In no way does anyone have to design down at all for devices like that, the notion being absurd.
I agree. OTOH, justifying with facts that there are a lot of Android phones in use that are several steps under the S4 in terms of hardware and data/wifi availability & affordability is almost superflous.
Androids are penetrating markets that were never penetrated by PCs or the web or even residential electricity.
You absolutely need to "design down" if you want to support all of android. Go build an app with a reasonable number of users and you'll learn this the hard way.
Good thing I never said "all of android", as there will always be edges that in many cases aren't even worth targeting.
I did, however, say that many of the cheap phones are quite powerful. And they are. And as someone who has several widely deployed games on Android -- one category where there is much more demands than categories like WhatsApp -- it is absolutely no problem at all.
I generally test things on the Nexus One just as a bottom end comparator. Compared to many of the devices from bottom-tier manufacturers now, the Nexus One is grossly underpowered. It is always surprising what it can run with gusto.
My problem with Firefox OS is that they don't add any value over what is already possible in modern mobile OS. All of them have a web browser of some sort.
It's not about what is possible todo, it's about replacing feature phones in developing markets. They can't effort "cheap" androids, neither iphones. And if they get the money for an "cheap" android they don't have money for the development equipment.
I think this is a pipe dream. Cheapest android cellphone is only $35 [1]. That is only possible because they're leftover stock of a phone that was produced using leftover stock of an ex-android phone chipset.
Thinking about what is technically possible has been very limiting for me. The value proposition of Firefox OS is that apps will run on all phones, unlike the current iOS vs. Java schism.
Of course it is likely to have other issues, but don't limit yourself to saying what is possible... think about the cost to actually deploy that possibility.
I'm not sure I really see that. Firefox os apps are basically html5/javascript and you can run that on Android and iOS at the moment using phonegap and the like. The advantage of a Firefox phone over a cheap Android seems a bit marginal although it is proper open source which may matter to some people.
The message of the article is good but it's not seeing the forest from the trees.
Having just read the Forbes artcile on the company and Jan in particular, some interesting things stood out:
1) Jan had money to start and was able to take time to build a user base and find the real value in the App and didn't need to go around "raising money". The SMS component of the app wasn't the initial focus. The company didn't need VC funding at any point. He was able to focus on product development and revenues started to come in to cover costs.
2) Jan is a technical guy. He did the initial backend but hired out the iPhone development. Either way he was involved. He developed the initial app for the first 9 months or so before bringing on Ackon as a cofounder.
3) There is real value in the app. No one needs to question this. There's no big pitch deck's, presentations, etc.The app was allowed to grow organically due to its network affect. The business can scale into the millions and billions of users.
The $16 billion exit is largely due to number 3. It's rare for a lot of businesses to have that kind of scale.
Reading the Forbes article, my takeaway is that there is no way anyone can "build a path to a xx billion exit". What one can do is find a business model that can actually scale and generate real revenue. Maybe not to billion users or hundreds of millions in revenue but enough to take it outside of the "lifestyle" business mode. Also, having money of your own and technical skills to execute doesn't hurt one bit.
I think one lesson that I would take away for the younger crowd is - slow down a bit. Go work for a big corp or even a startup that pays well. Save every penny. Instead of spending that $100 on the get together every other night save it. Build your skills. At some point, go for it. You'll have money to live off, money to test your business model and a fallback if it doesn't work (get another job).
EDIT: Another big reason for the big exit is incredible leverage by Jan. He's got the most equity. He doesn't need Facebook. He is already a millionaire and the App can only get better. This is deal making at its finest. I can only imagine how much back and forth happened, each time with a bigger number from Facebook.
"Instead of spending that $100 on the get together every other night save it. Build your skills." --if I didn't
spend so much on chasing tail; I could have retired at 30.
Honetly! And yes pathetic, but you are only young once.
I think the three points you raised are about how the company was built.
For entrepeneurs, it's good to study success stories, but it's sort of like the comment below saying that "J2ME is how it was built, it's not really the story." Knowing how WhatsApp was built gives some clue as to how it reached success, but doesn't fully explain why the value is so high.
The article is right- it "reached the middle billion" of people who spend $10/day and don't have a smartphone.
Here's a really interesting question: how many of WhatsApp's customers overlap with Facebook's? For the ones that do overlap, what are their usage patterns (i.e. which service do they use more)?
> 3) There is real value in the app. No one needs to question this. There's no big pitch deck's, presentations, etc.The app was allowed to grow organically due to its network affect. The business can scale into the millions and billions of users.
Can you explain this one? Something that seems to have been lost in all the hype is how yet another messaging app is somehow novel, innovative, or exciting. Is this somehow a major technological leap from other instant messengers (which we've had for nearly 2 decades now).
WhatsApp is different to most messaging apps in that it runs on dumb phones (featurephones), not just smartphones. It's different to built-in text messaging in that it uses data rather than SMS. Dumb phones are a lot cheaper than smartphones, and for most people, data is cheaper than SMS.
There are an awful lot of people in the world who can't afford a smartphone or a serious SMS habit. Those people use WhatsApp.
There is a parallel here to BlackBerry Messenger. In the UK at least, the two groups that use (or used, a couple of years ago) BlackBerries are businesspeople, who use it because it integrates with their corporate IT whatnot, and schoolchildren, who use it because BBM is free, unlike SMS. However, BBM is tied to a shonky and still not that cheap hardware platform that uses special snowflake network services that are not available everywhere, whereas WhatsApp is portable.
That sounds rather trivial to me. Facebook has a huge userbase and I'm sure that if they made FB Messenger run on J2ME as well, it would have massive uptake. Seems like Zuck just wanted to spread the love around a bit and generate some news (or has some serious lack of confidence in the competence of his own developers).
Yes, everything about WhatsApp is so trivial that Facebook with their billions and billionaires and 1000's of high-quality engineers decided to spend 18 Billion dollars on it. But of course they're all dumbasses because you say it's all 'trivial', right?
I think it's pretty clear that Facebook didn't buy WhatsApp for the technology itself but rather the large market penetration/installed user base. Whether that was stupid or not is up for debate.
> whether Whatsapp can retain their users, due to it's novelty or despite the lack thereof.
WhatsApp's been around for years; not sure what novelty you are talking about. It's a very classic and straightforward user-base argument: do I know anyone who uses it? Yes, then it's absolutely worth the six SMS it costs me; no? Meh. I personally had it for years, on and off, simply depending (internationally mobile) friends asking: “Communicate via WhatsApp?” It's about as obvious to subscribe as a all-you-can-eat SMS plan.
I'm a little more skeptical. This guy worked hard, sure, but as he seems to be the only guy making out big, after scores of guys worked hard. Maybe he's not much of a hero.
I don't think anyone is denying the role of luck, but there is something to be said about not falling in love with 'making the start up scene' so to speak. For many people it is a colossal waste of time.
I am trying to reign in a co-founder right now (not surprisingly the only non-technical co-founder) that is just a goo-goo eyed about the scene and not our product and not what I think his main goal should be which is selling. I get breathless phone calls describing some lunch meeting with some formerly successful founder or wealthy investor who now wants to partner/might know someone to invest/just wants to chat about common goals or whatever. I don't care. We don't need funding. He is wasting time or worse. I've tolerated it because it keeps him enthusiastic (he really does beat the pavement fairly well and this obsession is fairly new) but it is starting to get a little overboard.
I think that is what avenger123 is saying: keep your feet on the ground, focus on the product, and ignore the scene bullshit. That takes some foresight and discipline.
Yeah, you are either fundraising, or you are not. If you are, then go have lunch with the wealthy investors. If not, don't bother, it is a waste of energy.
1) Covers a huge amount of devices. Yep, because j2me, but also because what could be the top-1 competitor, Apple iMessage, can't inter-operate between Apple and Android devices (very stupid tactic, it will get marginalized).
2) Does not require an account, so it is not bound to Facebook, Twitter, ... You may ask, what's the problem with having an account? That you capture in your use base non-social people. Hey mom, put this in your phone and we'll exchange messages for free.
3) Because it just works and is not bound to a specific social network / company, people see it as SMS that is both free (hugely important because of stupidly overpriced SMS are, and especially, were). And... an improved version of SMS because MMS are totally a fail: limited, costly, lame.
4) Add to this business smartness behind that: old users don't pay for premium accounts, no ADV, resist to the temptation of fixing what is irrelevant for the mass of people (security) if this impacts in any way the product aspect (no account, trivial recovery of the account if you change phone).
5) Add to this product/technology smartness: don't archive messages server side so the service runs with 1/100 of resources. No huge scaling issues.
So this is just a very very very well executed product, that was able to provide what users wanted, and this is why they did a 16B deal, not for the j2me app, every successful business is a mix of a number of critical things.
The ground that made this possible was the incredible situation where on the internet era you had to pay 10 cents to exchange 160 chars between two phones.
I agree, this is the real reason WhatsApp took off so quickly. Especially that it automatically uses your phone number as account-id and then goes through your address book to automatically populate your WhatsApp contact list.
No other Instant Messenger did that. It was always: Create account, exchange account-ids, add to contact list. This adds huge amounts of friction for a new service, and WhatsApp sidestepped this completely.
I use KakaoTalk occasionally and KakaoTalk also does the same thing, use phone # as acct, auto populate contact using address book and also suggests friends that you might want to add.
> Apple iMessage, can't inter-operate between Apple and Android devices (very stupid tactic, it will get marginalized).
Apple's iMessage works fine with Android in the western developed world where you can get unlimited/cheap SMS. Also android support won't help iMessage in markets like India where there are very very many feature (j2me) phones out there.
Apple and WhatsApp have different goals. FB is far more threatened by WhatsApp than Apple.
What's at question here is whether you think the emerging market telecom providers will ever see their doom and lower SMS pricing before WhatsApp, Viber and the like remove all their messaging income.
> Apple's iMessage works fine with Android in the western developed world where you can get unlimited/cheap SMS.
No, it doesn't. It works in simple cases as long as none of the iMessage participants invites someone else into the conversation and starts a group conversation. Once that happens you can only participate in the conversation if you have an actual iMessage client.
That isn't true. I'm in a 3 year old group chat with 4 iPhone friends and 1 Android friend and it works perfectly fine. The Android friend just gets text messages, the rest of us get iMessages.
Its biggest plus is that it is cross platform. They have apps for Blackberry, Android, iOS and Symbian. So you can talk with almost anybody out there. At least in my home country, most people have Blackberry/Symbian. Imagine having a group conversation with people on different platforms and in different countries.
This. This is the answer I have always looked for.
> "But, but, how is WhatsApp any different than iMessage / Facebook Messenger / Hangouts?"
I have made this exclamation multiple times, and my friends in India and Singapore and other parts of Asia just turned up their palms with a "I dunno, everyone uses it and told me to get it."
I refused to use it since I like to use as few messaging platforms as possible (just Google Hangouts right now since it has most of my contacts, voice and video) despite my friends pestering me.
J2ME is the most reasonable explanation. I see why it made Whatsapp itself popular. But still? Almost everyone I know who's using it actually uses it on an Android/iOS smart device. Who is this "everyone" of theirs using it on feature phones? I doubt their friends circle intersects that heavily with rural villagers living on $10/day.
And also, is this really a viable long-term play for Facebook? How does this contribute towards the rest of their product plays?
In Holland, WhatsApp dominates, and it's not a $10/day country.
It dominates because SMS rates were too expensive here. Even when Mom & Dad would buy you an iPhone, kids were choosing Blackberries (!) as their primary phone because of internet messaging.
WhatsApp was seen as something worked with non BB devices (iPhones, Androids). It pretty much murdered the cell phone providers who were giving away cheap data rates and betting on income from increased SMS usages. Whoops.
When iMessage and Hangouts came along it was really too late. The process flow for most users who want to send a text is: go to WhatsApp first, if the user isn't there or doesn't respond, send an SMS and be frustrated with them.
Anyone could have beat WhatsApp in NL, but didn't. If the telcos would have given out unlimited SMS messages, it probably wouldn't exist. If BlackBerry would have released iOS/Andriod versions, they probably would have been the standard in Holland. If Apple would have released iMessage earlier, instead of (presumably) not wanting to piss off the carriers, it would have stood a chance. ... certainly if they also released apps for other platforms.
Yes and I would also add that using the phone number / imei as account identifier helped them a lot to convince everybody and their mother to use the service. Personally I'm not a friend of WhatsApp, but the reason even older, far from tech-savvy people are using it is the ease of access - you don't need anyones username or email - just install the app and your existing contacts show up. I've seen people who couldn't remember their own email using the app within seconds on a feature phone. Try that with Facebook.
I'm from Portugal and I saw in the comments that many people use it here. In my experience I never used it. I know maybe two people that use it. But clearly my view must be totally off the reality because of the stuff I read here and in the article comments section.
I pay 5€ a month and have unlimited free SMS's for almost everybody in my network. And that's it. That's what I use.
I could see the problem of cross device messaging, but SMS are for that.
To use Whatapp I'd need internet and pay for that in my mobile plan. I don't want that.
Although I have free unlimited sms for people I contact to (and use it a lot) there's still a little problem, that normally it is only for people in the same mobile network as me. But not really a huge problem because those people are very few and I don't mind spending the money in my phone that I wouldn't use for anything else.
Oh the sms and calls for people in my network are all free, so I have always money not being used for anything in the phone card.
I'm from Spain, and curiously, what you say about Holland applies to Spain word by word (well, maybe with the exception of iMessage having a chance - iPhones never got to be very popular here).
It would be interesting if some made a study about price of SMSs in each European countries 4 or 5 years ago vs. WhatsApp adoption. Maybe the huge differences in market shares would be clarified.
This doesn't explain the success WhatsApp had in Europe.
Germany, The Netherlands, Switzerland, etc. WhatsApp dominates all of these markets.
I think a reason for this is that in Europe, we're not used to unlimited text plans. Unlike the US, we don't have to pay to receive text messages, only to send them, so there is little incentive to get an "unlimited plan" anyways. But ultimately, you still end up paying 20 cents or so for a text message, whereas with WhatsApp you pay at max 1 buck per year.
Secondly, for a long time, WhatsApp's user experience was simply much better than what Facebook had to offer with their Facebook messenger app. There simply was no alternative to WhatsApp for quite some time.
I actually resisted hopping on the WhatsApp train for a long time, but when virtually everyone of your friends uses it, you will join up sooner or later.
Unlimited texts come with every mobile plan which cost more than 20€,
even when it's not unlimited the rates are really cheap and you don't pay for received texts ever.
MMS were never part of the data plan either, when you get unlimited SMS it always comes with free MMS.
afaik, using whatsapp require you to have a data plan, and in France you'll almost always get unlimited texts before data plans
almost all of France's carrier offer ulimited SMS as default. then comes MMS then voice.
I'd venture and propose that one of the biggest reason WhatsApp (and before that BB and why the blackberry platform had an appeal to mass consumers) worked so well is for a simple reason yet none is going to easily admit willingly:
WhatsApp lets you see if the person you texted to has read your text or not in a non intrusive way.
Also not to forget, WhatsApp started when iMessage didn't exist and Facebook messenger either, it wasn't even giving a delivery confirmation. Only BBM did, only on blackberries.
And here comes WhatsApp who does the exact same thing only much simpler ("are you on whatsApp? yeah! give me your phone number, i'll add you" instead of BBM pushing their PIN system...) and it comes working for almost all platforms. when it launched, it sure worked on Blackberry and iphone.
"how is WhatsApp any different than iMessage / Facebook Messenger / Hangouts?"
That's not the right question to begin with.
The right question on this is: are those instant messenger users on WhatsApp worth much financially, will they ever produce financial returns, such that you justify $19 billion in any respect. I say no, the value of messenger bytes is nearly zero unless you can hold the users hostage and extract large sums from them (as AT&T and Verizon did on SMS). All user actions are not created equal in terms of the economic value they generate - one network of actions is not inherently as valuable as another; this premise will eventually burst the myth of Snapchat and WhatsApp being worth their current valuations.
How much are all those users worth? Not much if they don't actually generate cash, which is why webmail and traditional instant messaging is worthless financially.
WhatsApp was a threat to them, and that demonstrates just how financially dark Facebook's future is. Facebook will have to perpetually destroy its shareholder value buying up non-performing businesses to try to stall those upstarts from destroying Facebook's temporary ad platform. Facebook is likely to get Craigslist'd (replaced by an endless parade of dirt cheap social apps with no business prospects), because the real financial value of what it does is low.
The app itself is very useful to its users, but it's not financially worth much, no different than Gmail or Yahoo Mail (which both have hundreds of millions of users that send bazillions of messages per day).
Take away: the messages aren't worth much financially; the users aren't worth much financially. Five years from now, people are going to look back on all of this, and think it was crazy how much was being paid for "users" and "messages."
> I say no, the value of messenger bytes is nearly zero unless you can hold the users hostage and extract large sums from them (as AT&T and Verizon did on SMS).
Exactly. Look at all the messenger platforms of yesteryear - ICQ, MSN, AIM, Y!M. Did any of them make any money aside from some ad scratch money to keep the lights on?
I agree. You have people out there like Marc Andreessen comparing SnapChat to Tencent and saying it's potentially worth $100B or so. These people are off their goddamn meds. They are pure vulture capitalists, and poor mom and dad out in Nebraska are going to get stuck carrying this stinking mess when their 401k inevitably implodes.
You want to see how much eyeballs are worth, look at reddit. They are pretty much a corporate charity, with their reddit gold scam going on.
When people get accustomed to not paying for things, they don't pay for things. I'm not going to pay for a newspaper when I can read it all online. And yet, I'll happily go to dinner one night a week and spend more than it costs for an entire year's subscription to the local newspaper.
WhatsApp is $1 a year. That's great if you're running with a few hundred employees and have such a massive user base. That's doing more than okay, in my book. But $19B? You're not getting that back. Certainly not in any timeframe that matters. Because what's hot today will not be what's hot 5 years from now. We all know that. It's how the tech industry works.
WhatsApp just works and it works really well - you don't have to sign up, you don't have to add contacts. Isn't it obvious what a big deal that is? Also it is really reliable and fast. Often it seems even when my phone has only the slowest GPRS internet connection available to it, WhatsApp is still as good or better than texts in terms of speed and reliability. Facebook messenger probably wouldn't even connect in that situation in my experience. I'd be surprised if Hangouts wasn't the same
In Singapore, where there are not many people using J2ME phones with a 3G data plan, this is why:
Facebook - not everyone has a Facebook account (think parents, young kids), you're not Facebook friends with everyone you know, and you don't _want_ to be Facebook friends with everyone you need to contact. I think they have been trying to change this on Facebook Messenger, but still, you need a Facebook account, and that's a line that many people refuse to cross on principle.
Hangouts - not everyone has Google account, because they use another email provider (Hotmail, Yahoo, ISP), and don't want to get "a Gmail account" just to use it. Granted, this might work great for Android users, but in practice, nobody uses this here (except maybe for multi-party video conferencing). Practically don't see iPhone users on Hangouts either; it is very much associated with Android (and hiding in the background, many people don't even know they're logged in because they don't use it, and nobody uses it to contact them).
iMessage - doesn't work on Android. Yes, there are many iPhones in the world, but you are incredibly selective about who you need to contact if they all have iMessage. But granted, this works quite transparently between iPhones.
Now, iMessage (and Viber) is probably the closest to the 0-step-to-add-contact way of WhatsApp. Because there's no process to do that, there's no contact-request 'approval' required from the other side, there's no friction. You add someone to your phone book, they show up in WhatsApp, you send a message or add them to a group. That's it.
It is a lot easier to teach folks to use WhatsApp just because of this. It's about as complicated to use as your platform's built-in SMS client. It is a huge contrast with the 101 features of WeChat, and to a lesser extent, LINE. WeChat is _huge_ with the PRC community here, but that's about it. Everyone else is on WhatsApp.
Viber is probably the next in line, but due to WhatsApp's network effects, it just didn't take off. Sure, it has internet voice calls, but it's known for being a little flakey on the call quality, and by default its notifications can be a bit annoying. WhatsApp never pops things up unless someone sent you a message.
Ah. Blackberry. I forgot that is included in the J2ME target devices. That explains nearly everything, although any of my friends who had those blackberries have transitioned since, and now people are just (well played WhatsApp) locked into the service.
I only have my parents and my wife on WhatsApp but none of them have or need a Google account or a Facebook account (which my dad refuses to use) and nor do they need to be iPhone users.
WhatsApp works quickly, cleanly and seamlessly across mobile platforms, and that's all it needs to do.
Let's not forget Symbian and Blackberry either. WhatsApp also runs on those.
I don't think starting a new Blackberry, Symbian or J2ME project today is really a good idea, though. It takes at least a few years for a company to make an exit, and by the time you do, those burning platforms will have flamed out.
It absolutely makes sense to work on a J2ME app today if you have a product aimed at developing nations. They won't be swimming in smartphones any time soon.
I can't find the link now, but I remember some discussion of cheap Chinese-made Android phones selling for single-digit numbers of dollars. At the end of the day, it's just like any other piece of electronics. It's not like Android phones are made out of more expensive raw materials than dumbphones. They're just newer. So I think that eventually the third world will be swimming in smartphones-- probably a lot sooner than you think.
Whether or not that impacts your business model depends on what the business model is, of course. I'm sure a few more Symbian apps will be cranked out as retailers blow out their stock of old inventory. Very poor people will probably hold on to old phones for years, as well. But phones do break, and batteries die after a few years, so a decade from now Symbian will be just an obscure memory, like the Acorn Archimedes or the ZX Spectrum.
Why? With (or even without) Google pushing cheap Android phones it makes no sense at all to write for blackberry or symbian. Decent blackberry phones are more expensive than decent Android phones. Windows 8 phones are also quite affordable.
Everybody is missing the point in this discussion.
While devices might be affordable, the real problem is service.
In most countries you can get a cheap android indeed but having a data plan is really expensive or it's just not possible because of how plans are structured.
The iPhone was in part revolutionary because it came along with a $30 data plan as an obligatory add on. Before that you had to be in the most expensive cellphone plans to have access to data.
In the developing world you either don't have a data plan or you have a REALLY restricted plan and I mean like you get 300MB a month and if you go over you get hit with a huge bill.
I was going to ask this. They have feature phones because they can't get the data plans. Some of these people don't have electricity at home but they still have feature phones. That market is insanely huge for mobile advertising.
But if your app has the goal of letting people communicate with their friends, I think it absolutely makes sense to target as many platforms as possible.
Not every app or startup is a messaging one and has the same goal of connecting people no matter what platform.
I'm pretty ignorant about whatsapp, but I paged through their blog a couple hours ago, before reading this post (https://blog.whatsapp.com/).
And the fact that they had blog posts about Windows Mobile, Nokia, and Blackberry clients really stood out.
I think Google, Facebook et al probably prioritize those platforms last, if at all. So kudos to Whatsapp for their contrarian thinking.
Their blog also shows the achievements of 1M and 2M simultaneous connections on a box, which I remember seeing here before on HN. So these guys are also very talented and experienced engineers.
Citation needed; I'd certainly love to know whether J2ME devices were a significant chunk of WhatsApp's actives, but there's zero data to back up the suggestion..
WhatsApp is also really strong here in Germany and other parts of Europe. More of my friends are on WhatsApp than Facebook (only very few more though).
These numbers are going to drop significantly now. Everyone I talk to is unhappy about the acquisition and will switch to something else like telegram.
I'd say more than 99.9% of WhatsApp users haven't heard of Telegram.
WhatsApp users are mostly not early adopters like you and your friends. They are ordinary people, because WhatsApp is is a simple communication tool targeted to everyone. And that's why they keep doubling their user base.
Unless Facebook actually puts their logo on WhatsApp, hardly anyone would notice. The tech community is minuscule compared to the large number of non-tech people using WhatsApp.
The uproar in Spain about WhatsApp switching to $1 per year was huge, noisy and... emphemeral. Line got a lot of new signups for a few weeks, but the only person I know that still considers using Line today didn't even have WhatsApp back then (but, like everyone else, does have it now).
Also in the Netherlands. E.g. in June 2013, 75% of the smartphone users used WhatsApp daily. Moreover, more than three quarter of the Dutch citizens has a smartphone.
So, WhatsApp is definitely used in high-profit markets as well.
Singapore is a Smartphone country, but Whatsapp is pretty dominant there. (I didn't run into anyone who didn't use it as their primary messaging platform)
Remember that it's not only the J2ME actives that matter. The fact that you have access to all your friends wihtout exception inside the same app is killer, even if you have the latest iPhone.
That's what made me return to WhatsApp in the first place. That, coupled with an apparently flawless experience.
It's not just the raw numbers. I would love to move onto Telegram, which is more secure, has an API, and works from a desktop. But, I can't.
There are about five or six odd people in my life (professional or private) that I message frequently. Even if 1 out of them isn't on a particular messaging platform, I can't adopt that platform wholeheartedly. With Fb Messages, Hangouts and every other popular smartphone oriented messaging platform there would always be that one or two contacts that you regularly communicate with, who would be left out due to having an incompatible device. Whatsapp on the other hand works on pretty much every phone. When you want to replace something as prevalent as SMS, the long tail matters.
There's another tangible benefit of focusing on so many platforms. Whatsapp, which doesn't spend much (if anything at all) on promotion, is prominently featured in the advertisements of many budget phones, as manufacturers see Whatsapp support as a strong selling point.
It's a bizarre perversion of everything that makes software development bearable. I've created my share of horribly cobbled-together ad-hoc embedded software development toolchains, but these can't hold a candle to the abysmal monstrosity of a vendor-patched J2ME SDK.
Yep, SMS push. I did some prototyping using this tech for a telco company here in Sydney back in, like, 2005 (9 years ago!). It actually worked quite well.
No, but it is not uncommon for J2ME apps to have a different package for certain vendors, or even for specific series or models of certain vendors. Those packages often utilize vendor-specific APIs or work around limitations or quirks in their J2ME stack. Opera's J2ME application took this to extremes, with dozens of different versions of a specific release.
The key success of Whatsapp is IMHO that it uses your phone's address book as contact list. There is no hurdle to use it what is very important for the average user.
The multi platform support from beginning is second thing. J2ME as stated in the article is negligible. I can't understand why this article is on top of HN.
The phone number as an id is a very important component to their adoption indeed. So do you posit that WhatsApp's adoption rates being what they are (compared to say Viber which does the same thing) is purely due to first mover?
One of the key reasons whatsApp was successful was the simplicity for the user to start communicating - No registration or username creation hence allowing users not to care about remembering passwords. Another important feature was that the user did not have to search for their friends in family if they were on whatsapp and then add them or send request etc. They used the phone number and users phone book. If you have a friend uses whatsapp it will automatically show you.
WhatsApps is easy, simple, quick and beautiful! so the path to $16B exit is not a J2ME app but an idea to get users start communicating with minimum amount of effort and time.
i dabbled with some J2ME development back in the day when palm pilots were cool, i even made a basic app for the original (early 2000-ish ) Motorola Razer.. it's not easy at all... i haven't looked for community resources for J2ME in years but back then i could find hardly any...
And out of curiosity I decided to search for J2ME on my laptop and Google had very little resources except official Oracle docs and a Java blog tutorial ... from 2005.
what kills me is the initial release had support for the IR blaster that most palm pilots had, the next "SDK" i found had it removed, and i later read it was because of something along the lines of "most devices don't support this so we removed it". the possibility of having a programmable IR remote control on the cheap 12 years ago was amazing to me. I think its kinda cool that newer android devices are starting to have IR blasters again..
J2ME is interesting. Each phone supported Java Specification Requests (JSRs) and you could look up which JSRs a phone supported. For example, JSR82 is some Bluetooth supporty thing.
The real problem was that between different phones and JSRs, some implementations were really bad (I remember having a Nokia 6500slide with dodgy implementations) and varied between phone models. This was especially odd on Nokia phones considering that there were hundreds of phones running S40 or S60 and yet there were differences between those phones. (If I recall correctly, I had a 5200 and 5300 and there were differences between them). Highly unreliable.
But $16bn unreliable for testing? Not sure. Well done for getting bought though.
Pretty sure facebook could give a darn about the app, they are buying access to the customers, to either get their data or show them ads. The app itself will probably be bloated or ruined within a couple years.
The point of the article is that WhatsApp built that customer base not having only shiny iPhone or Android app, but also having a presence on feature phones.
Framed another way, it goes to demonstrate the ridiculous price paid for the company. How are the "other 3 billion people" without smartphones going to contribute to Facebook's bottom line? When they don't even have Facebook? That they don't even view ads? And that the cost of switching is practically close to zero, with many other competitive products like WeChat?
It all seems to me that it's just to pad the "total number of active users on Facebook and associated platforms" column during earnings season.
As WhatsApp's user base grows, the probability of users who are also on Facebook increases and vice versa. Which means you are supporting my argument that this is just a play for "number of users", since it's very likely a good proportion would be counted twice instead of uniquely.
I don't think they're necessarily looking to integrate the user bases that way. If Facebook's mission is simply to "connect everything ” then this gets them closer to that goal. Whatsapp profits are note Facebook profits, and Facebook is connecting everyone that Whatsapp used to connect.
Facebook wants as many users as possible, connected to rapture in as many ways as possible. This is a big win for that, and will continue to reap benefits as the Whatsapp user base grows.
It's not apparent to me that having the "most number of users" is a net win as I stated previously, especially so when the WhatsApp co-founder states unequivocally that "nothing is going to change" for its users.
This is directly at odds with Facebook's business model which requires mining users' information for serving ads. Something has to give.
Looked another way, let's say WhatsApp is going to grow to 1 billion customers who pay $1 for an annual subscription. It would still take 19 years just to recoup the acquisition cost.
Whatsapp didn't start with a J2ME app, they started with the smartphone versions first and later they provided J2ME versions when they had already significant market share.
The point isn't actually which came first, it is that they are ubiquitous. The difference between WhatsApp and Viber is that WhatsApp put far more effort in being on every possible platform, and for something that relies on network effects, that effort was worth it.
Really? The viral growth & popularity of Whatsapp is due to early J2ME versions rather than the widespread adoption of Android.
I think it's the latter but maybe I'm mistaken.
On the other hand, how does Facebook expect to monetize these millions of users who are living on $10/day?
The number being thrown around yesterday was that Facebook paid $40/user. Bearing in mind that a good percentage of these users will never provide any ROI, it is one more reason to look like it was way overvalued.
A significant portion if the deal value is defensive, IMO. AKA: so Google or VK don't buy them and strangle off a major tentacle of user adoption and stickiness of the FB ecosystem.
Facebook doesn't have to directly monetize THOSE $10/day users for this to be a smart decision. They can monetize some users directly, but not having a competitor own whatsapp is worth a lot to FB.
That's a good question. I will invoke my "lack of foresight" card though, and say that there might be other future benefits that come out of this service
I completely agree with most comments about catering for most operating systems but I also think that this acquisition was also due to Facebook "panicking" about losing ground (e.g. teens) and WhatsApp having a great number of monthly active users.
For this article to really make sense, we will need to know how many J2ME users _really_ us Whatsapp.
Yes, there are many users with featurephones. But how many of them use Internet on it? Can i afford an internet flatrate with 20$/month income? Nope.
It's only free if you have a data plan, right? (or connected to WiFi). Historically in NZ, SMS has been basically free, unlimited but data has been 10mb, 100mb etc.
We're now trying to catch up on the world with our data plans on 3G and 4G networks, but even then it's about $50 NZD for 1gb data.
Is WhatsApp popular in the states? I'm Irish and living in Spain and in both countries it's incredibly popular. Most of my communication is channeled through it (I'd rather send a WhatsApp then call in most cases)
The article makes it sound a big deal to develop J2ME app. This app basically has just 2 screens, so I wouldn't think it would be any big deal to replicate those screens across platforms. Their challenge is more on the server-side, scaling for all the billions of users that they have - again, no big deal for plain text but mostly the pictures and the videos that are shared ...few big datacenters somewhere...again, nothing great. And hey, they dont even support voice calls. I dont buy that the app itself is a deal breaker. It's mostly their user base that they have been paid for.
reminds me about Sun buying StorageTek for 4B - a company whose technology and market had very visible end. J2ME on smartphones - basically an oxymoron if one knows why and how J2ME was designed 15 years ago - doesn't seem to be happening (despite predictable post-WhatsApp influx of crazy VC money into such combination in the next half year) and cheap $10-$20 smartphones are the next billions of devices.
And in Sweden (some) police men were discovered using Whatsapp - sending sensitive information about suspects[0]. They were discovered when they accidentally misstyped a phonenumber. Whoops.
The police in Sweden have some Blackberry encrypted services, but apparently these police men were not given one because they're expensive.
Facebook paid 16B Dollars for 400,000,000 active phone numbers and all the personal info bound to them. It's not the app itself it's the data, you know it well too.
However, they wouldn't have had 400 million active users, if they didn't make WhatsApp ubiquitous. And with only half or a quarter of the users, they'd be worth far less.
It's likely most of those users were once on Facebook, so I don't think personal info was a big selling point here. I think they made the purchase because 400,000,000 users outside of their bubble is a little worrying. It's a threat, what happens if WhatsApp begins to pivot and push more into Facebook territory?
That's not the case. WhatsApp barely holds any data. The user doesn't have to give over their personal details. It ties them to their mobile number & messages are stored only until they're pushed to the client. Once pushed they are then removed from WhatsApp servers.
If you map some 5-10% of these phone numbers to real users (which facebook can do), then you can map almost all of the remaining phone numbers to their real names as well, using the graph info.
There were some recent papers on algorithms how to do it, and they managed to match ~90% of 'anonymous phone numbers based on the facebook graph data. You stay anonymous only if all your friends and their friends care about anonymity as well.
even if removed, WhatsApp could store metadata like who is talking to whom. This is valuable to try to identify the trendsetters and key people to market to. With a bit of text analysis like google do with gmail, they can personalise ads more. all very very valuable data.
can someone explain how a free app ends up generating $40 per user?
more importantly, if facebook keeps buying large MAU at costs exceeding their revenues (not profit), at what point will those purchases start generating revenues (if at all)?
at what point will they no longer have money to buy MAU or even generate revenue on those users they purchased and own?
I have to say this is the wrong conclusion. J2ME and the stuff that runs it runs on is in the past.
Its simply a waste of time. So Im not sure why the OP focused on this. Let's not make up reasons this guy got bought out beyond a few dinners with Zuck and a whole lotta luck.
