WhatsApp Messenger is a cross-platform mobile messaging app which allows you to exchange messages without having to pay for SMS. Sequoia invested $8 million in 2011 in WhatsApp. WhatsApp was recently bought by Facebook for a whooping amount of $19 Billion in 2014, making it the company's largest acquisition. As per the terms and conditions of the deal, all 55 employees of WhatsApp including its founders will be granted restricted stock worth $3 billion that will vest over four years after the deal closes. In India, Reliance Communications has teamed up with WhatsApp for providing a unique scheme for Reliance's prepaid users -a WhatsApp Plan. So, WhatsApp is making money by tie-ups with popular telecom companies as well.
Ways by which WhatsApp earn and at the same how it reduces cost:
1] Subscription Charges WhatsApp already has a powerful revenue model. The WhatsApp messenger application is free for the first year and then it ostensibly charges around 0.99$ per year. WhatsApp has 450 million users. Six years after its founding, the company has 700 million monthly active users. Assuming most current users end up paying the subscription, that’s a potential revenue stream of several hundred million dollars a year from WhatsApp's current revenue model alone. The basic strategy is pretty simple. You download the app which is free of cost, and use it for one year. You are surely used to the app and will renew it for the subsequent years.
2] Value Proposition: Its co-founders Jan Koum and Brian Acton thought of giving a value proposition that no one could beat. They knew they could do what most people aim to do every day: “avoid ads.” They build an app that’s very simple, intuitive, and compatible across the range of mobile phone. Besides, WhatsApp also promises on respecting the customer’s privacy. While signing up for a WhatsApp account none of the data such as- email id, birthdate, address, workplace, likes, GPS location- are collected or stored. They knew they could charge people based on these value propositions.
3] Curbing the cost of production by entertaining least manpower: WhatsApp employs a handful of engineers (around 50) who work in the application development. The rest of the staff are basically for the customer support.
4] Limited Budget: WhatsApp saves its money by avoiding any expenses incurred on print, audio visual advertisement for promotion of the application. They have kept tight budgets, and do not spend a penny on advertisements. They rely on the old rule of "word of mouth" advertising.
5] Less maintenance cost on the web-site: There's hardly any extra piece of information on the website. Their website is worth only a few dollars. So, there are less maintenance costs as well. This means that they save a lot of running funds. This is how WhatsApp seized the opportunity of providing a messaging platform at affordable costs along with added features.
Rishika Ghosh
Batch - 2017
Symbiosis Institute Of Telecom Management
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