Is the Glass Half Full or Half Empty this Time for Facebook With Its Purchase of WhatsApp

The last week has been an amazing time as we have all followed the ongoing discussion that surrounds the decision for Facebook to purchase the application: WhatsApp for a staggering US$16 Billion (AUS$19 Billion).

  Predictably this move has polarised opinion with some saying that the almost $20 Billion price tag being ridiculous especially in  light of the fact that Facebook offered to buy WhatsApp main rival: Snap Chat for around $3 Billion but the offer was declined. Maybe so but a year later is paying 6 times more for a similar product the best thing you can do with this money.

Well you'd have to say that many Facebook shareholders think not and instantly many decided to sell their shares causing the stock to go into free fall. Again is this a good or a bad thing for investors. I guess it all depends on how you see the value of the deal and what it may eventually bring to Facebook.

WhatsApp is a platform that lets you send free messages and make free calls to other users regardless of what mobile platform or provider they use. 

So what is the upside? Firstly the product current has around 450 million active users and is growing quickly. It is a quality product that has differentiated itself by not having any advertising on the site which as we all know can be a real announce to everyone.

Instead users pay $0.99 per download instead of generating advertising revenue and this is clearly going to help drive Facebook's top line revenue well above its current 5 Billion dollars a year mark and help position them as a serious contender in the mobile arena as the trend in the increasing use of mobile devices continues to grow as evidenced by Facebook itself confirming that around 80% of online users are now entering Facebook via a mobile device.

So will this deal pay off for Mark Zuckerberg or prove in time to have been a serious lapse in judgement and fiscal sense. Just two years after paying one billion dollars for Instagram and saying that he was not sure if Facebook would ever make a similar purchase again, he signs off on this.
No doubt that in time we will be able to see more clearly if in deed the Facebook glass was half full or half empty. It will certainly be interesting to watch.

And until next time, good luck and good marketing.

Regards,

Daniele.

PS:  And remember to come along to our free, Digital Marketing Program seminars.

Just call VECCI to speak to Maria D'Cunha on: (03) 8662 5126 and find out the next time Trent Rebeiro or I are presenting at a Venue near you.  Hope to see you all there for a good chat.