Saturday, 22 February 2014

A booming WhatsApp posts mixed message as strong rivals emerge in Asia; War of the Apps heats up in China

 
 What's inside WhatsApp? 

WhatsApp: A booming smartphone message service

SAN FRANCISCO - WhatsApp was launched five years ago as a shot at doing to text messaging what Skype did to telephone calls.

If Facebook's move to buy the startup in a cash-and-stock deal valued as high as US$19 billion (S$24 billion) is any indication, the California-based WhatsApp may have hit the mark.

The firm founded by former Yahoo employees Brian Acton and Jan Koum in 2009 took its name from a play on the phrase "What's Up," according to its website.

They also devoted themselves to a credo of "No Ads. No Games. No Gimmicks."

A note stating just that and signed by Acton remains taped to Koum's desk, according to venture capital firm Sequoia, which invested in the startup early and stands to cash in big time on the Facebook take-over.

The "contrarian approach" of gathering no information about users for targeting ads was shaped by Ukraine-born Koum's aversion to tactics of secret police in communist countries, Sequoia partner Jim Goetz said in an online note.

"Jan's childhood made him appreciate communication that was not bugged or taped," Goetz said.
"When he arrived in the US as a 16-year-old immigrant living on food stamps, he had the extra incentive of wanting to stay in touch with his family in Russia and the Ukraine."

Koum remained true to those ideas when, after working at Yahoo with his "mentor" Acton, he turned to building WhatsApp, according to Goetz.

The stated mission was to build a better alternative to traditional SMS messaging in a world where smartphones were clearly becoming ubiquitous.

The founders jokingly described themselves at the website as "two guys who spent combined 20 years doing geeky stuff at Yahoo! Inc."

WhatsApp is a platform for sending images, video, audio, or text messages for free over the Internet using data connections of smartphones.

The application is free, but after using it for a year, there is an annual subscription fee of 99 US cents.

"We feel that this model will allow us to become the communications service of the 21st century, and provide you the best way to stay in touch with your friends and family with no ads getting in the way," the startup said in a blog post discussing pricing.

WhatsApp is reported to have grown stunningly fast to more than 450 million users and said to handle 50 billion messages daily.

As of the start of this year, WhatsApp had 50 employees, more than 30 of them engineers. While the company has its headquarters in the California city of Mountain View, where Google has its main campus, most of the engineering work is reportedly done in Russia. - AFP

In Asia, WhatsApp posts mixed message for Facebook


Singapore: WhatsApp may be hugely popular but its forays into Asia, the world's biggest mobile market, have had mixed success, raising questions about whether it can sustain the explosive growth Facebook Inc cited to justify its $19 billion price tag.

Data from app metric company App Annie, for example, shows that WhatsApp ranks as the top communications app in only three of 13 Asian countries tracked - Hong Kong, India and Singapore.

"WhatsApp has been a strong player in Asia, but in the past year has faced strong competition from LINE and WeChat," said Neha Dharia, India-based analyst for Ovum, a technology consultancy. "WhatsApp has not been displaced by these players, but has seen stiff competition in growing its market share."

Facebook said on Wednesday it would buy WhatsApp for $19 billion in cash and stock, in a deal worth more than Facebook raised in its own IPO. [ID:nL3N0LO52J]

For sure, WhatsApp has been phenomenally successful. For many users it has replaced sending costly texts, or SMS messages. Since its launch in 2009 it has built an active monthly user base of 450 million users.

A survey by marketing and research company Jana found WhatsApp to be the most used messaging app in all the countries it surveyed - India, Kenya, Nigeria, South Africa, Brazil and Mexico - beating competitors by a huge margin. 

The reason: users most prize the basic functions it offers - ad-free chat and photo sharing.

WhatsApp subscribers sent 18 billion messages a day in January. The overall market is growing rapidly: According to Ovum, 27.4 trillion such messages were sent last year; this year that figure will be close to 69 trillion.

CHINA CALLING

By hooking up, Facebook and WhatsApp may be able to take on those markets that have been elusive to Facebook so far. With Facebook blocked in China, and lagging Twitter Inc and Naver Corp's LINE in Japan, WhatsApp "is a potential avenue for Facebook" into those markets, said Vincent Stevens, a senior manager for telecoms consultancy Delta Partners.

Forrester, a consultancy, forecasts that China will have more than 500 million smartphones this year.

And in the fast growing smartphone market of India, says Neil Shah, research director of devices and ecosystems at Counterpoint Research, local users now account for almost 9 percent of total active WhatsApp users around the world - some 40 million of them.

But Facebook and WhatsApp face formidable foes. Where once messaging apps were simply about messaging, now Tencent Holdings Ltd's WeChat, LINE and KakaoTalk offer a slew of additional services, from icons and games to buying goods and services.

"LINE and the others are very different to WhatsApp. They're much more innovative in the business models they engage in," says Michael Vakulenko of VisionMobile, a UK-based consultancy. "They are innovating much faster than WhatsApp and going in a different direction."

This could prove decisive in Asia - the biggest battleground for social messaging apps - where no single player dominates.

Data from market research company Nielsen, for example, showed BlackBerry Messenger as the most downloaded messaging app in Indonesia last October, the latest data available, while Viber, bought by Japanese online retailer Rakuten Inc for $900 million last week, was the most popular in the Philippines, and LINE in Thailand.

WhatsApp was third in Indonesia, second in Malaysia and not in the top-10 in the Philippines or Thailand. And while locals say WhatsApp remains the default messaging app in Indonesia, some notice a shift.

FICKLE FORTUNES

Jerry Justianto, who runs a radio station network in Jakarta, says he's noticing fewer of his friends using WhatsApp than before. "I think it's reached a plateau in Indonesia," he said. "I see a lot of WhatsApp accounts in my list are inactive."

A survey by market research firm On Device Research late last year found that while nearly two thirds of Indonesians surveyed had installed WhatsApp, less than half used it at least once a week, compared to three quarters of Brazilians who had installed it.

Part of the problem, Justianto says, is that WhatsApp's approach of linking accounts to a phone number doesn't suit Indonesians who change their SIM card frequently. "Some of my early adopter friends are moving to Telegram messenger, where you can activate multiple devices with one number."

Telegram, which offers much the same features as WhatsApp, is evidence of the fickleness of users. The app is free and heavily encrypted, and is popular in some countries. In Spain, for example, it has risen from its launch last year to be the No.1 communications app in Google's Play store, at the expense of WhatsApp, according to App Annie data.

This, said one executive at a handset company in Spain, was partly because of a viral campaign among users to switch, and partly because many users dumped WhatsApp before they were charged at the end of their first, free year.

GETTING USERS TO USE MORE

Across Asia, the fragmentation is evident to users such as Martin Tomlinson, Asia Pacific director for On Device Research, who says he has installed at least six messaging apps for work: "I need to have at least three of these on my phone because that's how my clients communicate."

LINE, for example, considers its top markets as not only Japan but also Taiwan, Thailand and Indonesia. Now, says Simeon Cho, general manager at LINE Plus, which handles LINE's ex-Japan business, the goal is less about winning new users than getting existing ones to use the app more frequently.

Kakao, which started the KakaoTalk messenger service in 2010 and has since grown rapidly to 130 million users, said it was also focusing heavily on Southeast Asia, where there is relatively low smartphone penetration and no dominant messenger service.

And for China's Tencent, KakaoTalk and LINE are more of a threat overseas than WhatsApp, as the company's WeChat expansion is focused on Southeast Asia.

WhatsApp would only pose a serious threat if the likes of Tencent were to expand farther west. "This means it's now going to be more difficult for LINE to win in North America and Europe," said Serkan Toto, a Tokyo-based technology consultant.

 - By Jeremy Wagstaff Reuters

Facebook deal sends message to WhatsApp's Asia rivals


HONG KONG - Facebook's stunning US$19 billion (S$24 billion) deal for messaging service WhatsApp places the social network in an arena where competition is fierce, particularly in Asia, where fast-growing chat rivals dominate their home markets.

The multi-billion dollar valuation of WhatsApp is based on expectations that its 450 million monthly users will eventually pass one billion, powering the social network's drive into the fast- growing mobile space - particularly in emerging markets, where the simplicity of the messaging app can thrive on less expensive phones.

But it is not the only service gaining traction around the world, particularly in parts of Asia, where players such as WeChat in China, Kakao Talk in South Korea and Line in Japan dominate - and, according to analysts, show greater potential for making money given their different products and strategies.

While WhatsApp, which is free to download but charges users US$1 per year, is popular in some Asian markets such as Hong Kong and Singapore, services such as Line, WeChat and Kakao have also expanded around the region and beyond.

"Mobile-messaging apps are growing fast in Asia," noted Elinor Leung and Seung-Joo Ro in a report for regional brokerage CLSA.

"While Facebook dominates the US, mobile-messaging apps such as WhatsApp, Line and WeChat have rapidly taken over Asian SNS (social networking service) markets, especially in the emerging markets."

WhatsApp currently has a larger base than each of the three Asian services but they are growing fast, particularly when it comes to emerging markets, where smartphones or less expensive "feature" phones are seeing explosive growth.

CLSA noted that "Asian mobile-messaging apps like Tencent's WeChat and Naver Corp.'s Line should be valued at a premium to WhatsApp with their wider service offerings and higher revenue potential from games to e-commerce and payment."

WeChat is currently valued by CLSA at US$35 billion and Line at US$14 billion.

Global social messaging volumes are expected to reach 69 trillion and subscribers to such services 1.8 billion by the end of 2014, according to data from market research firm Ovum.

"In SouthEast Asia there is a huge tussle for market share," Neha Dharia of Ovum told AFP.

"WhatsApp will be able to claim the Facebook share of those markets as well, making it hard for these other guys to grow."

WeChat

WeChat, or "Weixin" in Chinese, is a free instant messaging and social media mobile application developed by Chinese Internet giant Tencent and officially launched in January 2011.

It has not only become a popular mobile communications tool in China - where Facebook is mostly blocked and WhatsApp usage is comparatively low - but has also attracted tens of millions of users in overseas markets.

The Facebook deal values active WhatsApp users at US$42 a piece. According to analysts with Japan's Mizuho bank, WeChat is worth twice that amount "on the back of its gaming, [commerce] and mobile payment potential".

WeChat's number of monthly active users worldwide reached 272 million by the end of September last year, more than doubling from a year earlier amid a drive to attract more users in countries such as India, Spain and South Africa.

WeChat provides text, photo, video and voice messaging services on major mobile platforms. It also offers games, online payments and taxi booking.

Line

Launched in 2011 as an instant message and free voice call app, Line - whose parent company is South Korea's Naver Corp. - has grown to 350 million users worldwide and aims to hit 500 million this year.

Its user-friendly interface and voice communication capacity have helped it become one of most successful apps in Japan, while also seeing popularity in Thailand, Taiwan, Spain and Latin America.

The app is best known for "stickers" - cartoon-like images purchased by users, sales of which are core to Line's revenues.

Kakao Talk

Launched in 2010, Kakao Talk is used by 95 per cent of South Korea's smartphone users and boasts 130 million users worldwide. It is reported to be preparing for an initial public offering next year that could value it at US$2 billion.

The free app allows users to send messages, pictures, soundbites and video via the Internet, either on WiFi or through cellphone networks.

Gifts can be bought using Kakao's online shopping facilities, a feature that helped push revenue last year to 230 billion won (US$215 million) from 46 billion won a year ago.

It is eyeing Southeast Asian markets including Malaysia, the Philippines and Indonesia where it is fighting for market share against Line and WeChat.

Viber

Developed by Cyprus-based Viber Media, which was founded in 2010, the service boasts 280 million users and was recently purchased by Japanese IT firm Rakuten for US$900 million - or roughly US$3 per user. It allows free text messages and phone calls as well as video messaging. It recently launched a service allowing desktop users to call non-Viber users' mobile phones, in a challenge to Skype, owned by Microsoft.

Analysts have questioned whether it can make more money from customers in the same way that the likes of Line and WeChat have, leading to Rakuten's share price plunging as much as 13 per cent on the first trading day after it announced the deal.

- AFP

War of the apps heats up in China

In the Battle between the two Chinese Internet giants Alibaba and Tencent, the consumers are the real winners.

 
RAISING a hand to flag down a taxi by the streets could be passé in China, or at least in the eyes of the taxi booking app developers.

Two popular mobile apps, Kuaidi Dache and Didi Dache (“dache” means taking the taxi), make it possible for passengers to hail a cab without flailing an arm, but just tapping on their smart phones.

The war between the two apps, which are backed by Chinese Internet giants Alibaba Group and Tencent Holdings Ltd respectively, has gotten more intense this week.

On Monday, Didi Dache announced that it was going to revive its 10-yuan (RM5.42) rebate programme for users who book a cab and pay via Tencent’s instant messaging app Wechat.

Every passenger is entitled to receive a subsidy of 10 yuan each trip, for up to three trips a day.

For taxi drivers in Beijing, Shanghai, Shenzhen and Hangzhou, a reward of 10 yuan awaits for up to 10 bookings they successfully respond to through Didi Dache.

Cabbies in other cities will receive 5 yuan (RM2.71) for the first five trips and 10 yuan for the next five trips.

To prevent users from cheating, Didi Dache said it would block passengers and drivers who reach mutual agreements to use the app only after the passengers get into the cabs, with the motive of earning the rebates.

Didi Dache reportedly poured in 1bil yuan (RM542.18mil) for this round of subsidy.

Kuaidi Dache was quick to follow up with an “always-one-yuan-more” reward.

Users who hail a cab through its app and pay via Alibaba’s mobile payment service Alipay Wallet were promised that they would always enjoy one yuan more than users of its competitor.

It is not the first time these two apps are using these tactics to entice users.

In January, Didi Dache rolled out the 10-yuan rebate promotion, prompting Kuaidi Dache to offer the same rebate in response.

When Didi Dache reduced the 10-yuan incentive by half on Feb 10, Kuaidi Dache seized the chance to announce that it would retain the 10-yuan offer.

Now that Didi Dache has readjusted the rebate back to 10 yuan, Kuaidi Dache has decided to have the upper hand by pledging “always-one-yuan-more”.

However, just a day after these announcements were made, Didi Dache upped the rebate once again. Passengers would now receive between 12 yuan and 20 yuan (RM6.51 and RM10.84) per trip.

Kuaidi Dache followed suit to offer a subsidy of at least 13 yuan (RM7.05) per trip.

While Didi Dache offered 10,000 free trips a day to lucky passengers, Kuaidi Dache pledged 15,000 free trips a day.

It appeared that there was no end to this intense price war.

This “war” between the two apps is only one segment of the fierce rivalry between the two Internet companies, Tencent and Alibaba.

Tencent owns Wechat while Alibaba has developed a similar app known as “Laiwang”.

Alibaba bought 18% stake of the popular Twitter-like service Sina Weibo last year, which is the contender of Tencent’s Wechat.

Last week, Alibaba offered to purchase mobile mapping app AutoNavi. Tencent, meanwhile, already has a mapping service that boasts a similar function to Google’s Street View.

This latest contest in the taxi-booking app was seen as a tactic to encourage smart phone users to adopt the habit of using mobile payments.

During the just-concluded Chinese New Year holiday, Wechat users went gaga over the electronic angpao.

They had to first link their bank accounts to Wechat before they could give or receive money among their circle of friends.

According to Beijing Times, from the eve until the eighth day of Chinese New Year, more than 40 million angpao were handed out in the activity participated by more than eight million people.

Even Alibaba’s founder Jack Ma described the phenomenon as a “Pearl Harbour attack”.

In a poll on finance.ifeng.com, 70.42% of some 5,600 respondents felt that the war of taxi booking apps between Tencent and Alibaba was not a vicious competition.

Almost half of them believed that what mattered most at the end of the day was the product experience.

They were of the opinion that the company with the better service would prevail, in contrast to only 23.38% of the respondents who predicted that the one with bigger financial capability would eventually be declared the winner.

With the two giants locking horns and trying to outdo each other, many believed that the consumers are the biggest beneficiaries.

The rebates did not have a reported deadline. Until the cash rewards are withdrawn, users can continue to enjoy the subsidies to save some pennies.

Contributed  by Tho Xin Yi The Star/Asia News Network

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1. WhatsApp deal dwarfs other high-profile Tech acquisitions 
2. Tech players race to widen reach !

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