Several weeks ago we spoke to Neeraj Arora, vice president of business at WhatsApp, to talk about the company’s plans and outlook as well as the Indonesian market. The popular messaging client has seen its market flooded with competition lately but still managed to contribute significantly to the shifting of messaging from SMS to Internet-based. Arora addressed the issue of more sophisticated competition, markets with low credit card adoption, its view on advertising, and how quickly the app’s adoption spread.
WhatsApp has always been a low-key company with not much known about the people behind it and rarely do the co-founders Jan Kouma and Brian Acton appear or make statements in public, so it was a bit surprising when we were contacted by Arora to have a chat about the local market.
According to Arora, WhatsApp is very popular on BlackBerry, Android, and iPhone but the greatest growth areas are seen in iPhone and Android, interestingly enough. All three platforms clearly have their own native messaging apps but for WhatsApp to make that claim means that there’s a significant number of people who find limitations within those native apps.
Built-in Apps and Competition
With BlackBerry Messenger, despite its security, flexibility, and popularity among BlackBerry owners, it’s only applicable for BlackBerry. Apple’s iMessage is equally closed, only available for Apple device owners. On top of that, iMessage has serious group messaging problems that make it ineffective for that purpose.
Google has two messaging solutions for mobile consumers but perhaps that’s exactly why it’s not that widely used. It doesn’t help that Google doesn’t advertise its Google+ Messenger other than providing a dedicated app on recent Android releases.
What could have been the king of mobile messaging is actually Facebook Messenger. Having been launched as a separate app for smartphone platforms, Facebook Messenger has more than 500 million potential users as that’s how many Facebook members accessing the network from mobile devices, at least according to a regulatory filing in July. More than 100 million of those don’t even access the desktop site. For whatever reason, Facebook doesn’t have a hold on mobile messaging even as it recognizes the significant growth of mobile in emerging markets.
When it comes to mobile messaging, people talk about WhatsApp, Line, and KakaoTalk. While Line and KakaoTalk are very popular in Asia thanks to their adoption of emoticons, special gifts, icons, and the like, WhatsApp doesn’t have a plan to introduce them to its network.
According to Arora, WhatsApp doesn’t want to be distracted by gimmicks because they get in the way of messaging. WhatsApp is about delivering messages and it wants to be able to do so quickly and efficiently. Given the app is also popular among Nokia’s S40 users, it’s important to keep it data efficient.
The company has made improvements on the backend which helped the network to deal with more than ten billion messages being exchanged per day as of August. The company’s Twitter account back then announced that it recorded 4 billion messages being sent and 6 billion received. The discrepancy may have been attributed to group messaging.
Market adoption and revenue generation
Arora revealed that Brazil, India, Indonesia, Malaysia, and Thailand are the more important markets for WhatsApp. While it’s doing very well with Asha deals in India and South Africa in which the app is preloaded on those S40-based Nokia phones, the deal in Indonesia hasn’t been met with the same level of enthusiasm.
This could be the reason behind WhatsApp’s deal with Telkomsel in Indonesia to get subscribers to use WhatsApp. With specific data plans targeted at messaging activities, Arora expects more Indonesians to adopt the app and get on board the data train as he is bullish about the Indonesian market. Nokia has been actively promoting WhatsApp as a messaging solution for its mobile devices in Indonesia in the last couple of years to defend itself against the migration to BlackBerry and its Messenger platform.
The lack of credit card adoption in certain emerging markets presents a challenge to WhatsApp in how it monetizes its platform but Arora said that there are other ways to get around that issue.
While it makes money from selling the app for $0.99 on the App Store, the app is free to download and use for the first year for customers using Android, BlackBerry, and Windows Phone. The deals with carriers across the globe also provide a decent revenue for the company though Arora declined to say the split or the monetary value.
It’s not inconceivable for WhatsApp to remain “free” for use by mobile subscribers. Its aforementioned carrier deals, if pursued even more aggressively, could provide enough revenue to sustain the company while keeping WhatsApp seemingly free. WhatsApp customers could be paying for use of the service through their monthly data plan subscriptions. After all, for $1 a year per registered phone number, the amount is negligible to customers.
Positioning
The company doesn’t see itself as a direct replacement for SMS despite evidence seemingly to the contrary. Arora said that SMS of course has its place in the market and it’s here to stay but people can do so much more with data packages. The move towards smartphones makes it more sensible to adopt a data-driven messaging app that offers more abilities than a simple SMS or MMS.
WhatsApp lets its customers send not only text and images but also video, sound, as well as location. Its most recent update allows people to have groups that contain 30 members, up from 20 members previously, which makes it a compelling option for families, student groups, sports groups, various organizations, as well as other purposes.
Arora believes that what drives customer engagement is how good the product is. He pointed out that with no advertising and very little promotion, WhatsApp has been extremely popular. Its viral spread has been primarily attributed to existing customers recommending their friends, families, and colleagues to use the app.
