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Is the WhatsApp Messenger Worth a Billion to Google?

Is the WhatsApp Messenger Worth a Billion to Google?
By Jennifer LeClaire

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"Two of Google's biggest competitors, Apple and Facebook, have their own messaging apps," said analyst Greg Sterling of reports that Google is in talks to buy WhatsApp. The WhatsApp messaging client "would presumably become Google Messaging or something similar and be folded in as a native component of Android."
 



What's in an app? Well, if it's WhatsApp, there could be a billion-dollar payoff -- from Google. Google is reportedly in talks to buy WhatsApp for a cool billion bucks.

WhatsApp Messenger is a cross-platform mobile messaging app. The app allows you to exchange messages without having to pay for SMS. WhatsApp Messenger is available for iPhone, BlackBerry, Android, Windows Phone and Nokia.

WhatsApp Messenger uses the same Internet data plan that you use for e-mail and Web browsing, which is why there's no cost for texting through the app. But WhatsApp is more than a messenger. The app also lets you create groups, send unlimited images, voice and audio messages. And it's advertisement free, at least until Google buys it (if Google buys it). WhatsApp charges users a yearly fee of 99 cents after the first year of use.

A Must for Google?

According to news reports, Google and WhatsApp have been in talks for at least a month -- and WhatsApp is pushing the limits on the acquisition price. WhatsApp may have some leverage based on its popularity with consumers. The company said it broke a record on New Year's Eve, receiving 7 billion inbound messages and transmitting 11 billion outbound messages in a single day.

Neither Google nor WhatsApp could be reached for comment. This isn't the first time the rumor mill speculated that Google would by the company. Facebook has also been listed among potential acquirers. But all fingers point to Google as the impending owner of the messaging app.

Greg Sterling, principal analyst at Sterling Market Intelligence, said there are two reasons Google would be interested.

"Two of Google's biggest competitors, Apple and Facebook, have their own messaging apps," Sterling told us. "This would presumably become Google Messaging or something similar and be folded in as a native component of Android," Sterling said. "Gmail messaging hasn't taken off. It's not clear how popular or successful mobile messaging on Google+ is."

What's at Stake

The messaging app market is getting increasingly competitive and it would make sense for Google to enter the fray. Beyond WhatsApp, there are other smaller acquisition targets like Line, WeChat and KakaoTalk. All three have proven they have a place in consumers hearts.

Consider the messaging app acquisition and development scene over the past couple of years. Facebook acquired Beluga in 2011. Samsung debuted a proprietary messaging app called ChatOn in late 2011. Deutsche Telekom invested $7.5 million in Pinger last February. In March 2012, South Korea's dominant mobile carrier bought MadSmart to gets its hands on the messaging app TicToc. Yahoo Japan last October bought a 50 percent stake in Kakao's Japanese subsidiary.

Carriers are feeling the pinch. In fact, according to a research report from Ovum, texting apps like WhatsApp have drained $23 billion in revenue from carriers as of the end of 2012.
 

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