In countries like Malawi where mobile phone companies ask for an arm and a leg for SMS service, WhatsApp is god-sent. But have you ever wondered how the company makes money by offering a free and out of this world service?
The creators of WhatsApp, Brian Acton and Jan Koum vowed back in 2009 when they launched the app that WhatsApp would never use adverts as a means to monetise; these guys actually took an oath through the mantle; no ads.
When Facebook bought WhatsApp in February 2014 for a colossal amount of $19 billion, Mark Zuckerberg echoed the promise even louder.
By 30th September, 2014, WhatsApp had only managed to bag in $1.28 million for Facebook. How was that not-so-impressive income come about?
WhatsApp, until then, was offering the service for free for only one year after the expiry of which a customer would be charged $0.99 per year. On January 18, 2016, WhatsApp announced that it had done away with the subscription fees as it did not work out very well.
Most of the WhatsApp users did not have debit cards numbers and the subscription model wasn’t just working. According to the statistics portal, Statista, WhatsApp’s daily active users moved from 700 million in January 2015 to one billion in February 2016. This figure is a few notches shy of Facebook’s 1.28 billion active users.
Outside USA, there are other popular messaging apps that have successfully monetized. Webchat is an enticing Chinese SMS app that has ads as well as online games. With only 438.2 million users, the app made $924 million in just Q3, 2014.
KakaoTalk, a South Korean SMS app with 48 million users, made $190 million for its owners in 2013. The app makes money from online games, advertising and from selling emoticons (emotion icons) and stickers.
Forget about it, WhatsApp is not going to do any of those. Currently, Facebook uses WhatsApp to study the behavior of users so that it can target adverts better on Facebook. The fate of WhatsApp is attached to Facebook.
If the economic veins of Facebook pump up enough blood to its systems, the fetus WhatsApp survives. Should the heart of Facebook suffer some cardiac arrest, WhatsApp will proceed to the grave with its mother.
The good news is that WhatsApp has announced that it would find other ways to make money from the software and service. WhatsApp will allow businesses access its special API (Application Programming Interface) and link it to their existing customer service tools.
In plain language, Malawian bank ATMs will be connected to WhatsApp for a modest fee. When that happens, the ATM will WhatsApp you and explain why the machine can’t vomit money at that time. The SMS will go further to direct you to the nearest alternative ATM’s.
All I am trying to say is that, WhatsApp is prepared to cut into mobile phone companies’ profits even more. And that is not bad news for you and me, or is it?