In economic terms, WhatsApp has benefited from an almost complete absence of transaction costs, and from the increasing returns to scale known as “network effects.”
Whatsapp price how to#
The accelerating pace with which users are signing up for the service is largely a function of a phenomenon we call “near perfect market information.” Thanks to social media and other forms of communications between consumers, valuable new products are adopted and effectively marketed by early users to other users, who in turn recruit the next and larger wave.Ĭoupled with low switching costs and a lack of any real learning curve, there is simply no reason why consumers who already have smartphones and know how to use text messaging wouldn’t switch to a better and cheaper alternative as soon as they became aware of its existence.
Whatsapp price software#
Most of the infrastructure WhatsApp relies on is paid for by the customers (smartphones and broadband data plans) and maintained by wireless carriers, allowing the company to focus its efforts entirely on its own software and optimizing performance for handling messages.īut exponential technologies only partly explain why WhatsApp has drawn customers away from more expensive and more limited proprietary text messaging services offered by the carriers or from incumbent service providers ( including Apple’s iMessage). How? Thanks to decades of exponential improvements in the price and performance of digital technologies, companies large and small can offer new services that are better and cheaper than those of established competitors.Īnd it gets easier.
Scaling to 400 million users in a few years will never be easy, but the miracle of digital technologies is that it is even possible. The product is developed, marketed, and delivered over increasingly ubiquitous (and global) mobile networks, and the service operates over those same networks. In the case of WhatsApp, everything happens in software, which can scale indefinitely for decreasing marginal cost. As we say at Accenture, every business is now a digital business. This has long been true for information products and services, but it is increasingly true for physical goods as well, both because such goods increasingly embed digital technologies and because their supply chains for production and distribution have likewise become virtual. How is this possible? A big part of what drives such unconstrained growth, even for a product offered by a tiny startup, is the declining cost of new product development, production, marketing and distribution, much of which now takes place within and with digital ecosystems. Indeed, we have seen many examples of products and services that exhibited a similar pattern of sudden market adoption, or what we describe as “catastrophic success.” Our research suggests that even as valuable as a billion avid customers might be, the speed with which WhatsApp has and continues to grow is even more important. “Few services in the world can reach one billion users, and they are all valuable.” “By itself, WhatsApp is worth more than $19 billion,” he said. Speaking this week in Barcelona at the 2014 Mobile World Congress, Facebook CEO Mark Zuckerberg argued that the company’s enormous and still-expanding user base more than justified the price. Even in retrospect, it’s always difficult to measure the value of an acquisition, if only because there’s no way to know how markets would have developed absent the deal.īut what is clear is that it was the shape of WhatsApp’s growth curve, rather than its modest revenues or its remarkably lean operating model (the company has only 55 employees), that caught Facebook’s attention. With most of the terms of this and similar acquisitions kept private, it’s impossible to say whether the $19 billion price tag makes economic sense.
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