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SA analyst: Facebook’s Whatsapp acquisition guarantees its dominance

February 20, 2014 • Opinion

Facebook’s acquisition of Whatsapp for $19 billion creates a beachhead into emerging markets, securing its future by targeting growth in countries where there is little fixed line infrastructure and mobile has become pervasive.

Steven Ambrose, Strategy Works CEO (image: Strategy Worx)

Steven Ambrose, Strategy Works CEO (image: Strategy Worx)

Steven Ambrose, Strategy Worx CEO, says Whatsapp growth potential in emerging markets is much higher that Facebook’s because it is already integrated into feature phones and even semi feature phones, and is fast replacing SMS as the messaging option of choice.

“With smartphone penetration sitting at well below five percent in an African context, dumb phones and features phones predominate. As people become connected, the move to Whatsapp is a natural one as an affordable alternative to SMS.

“However, for the mass market in South Africa and the rest of Africa, social media platforms and use of the Internet on mobile phones has an initial economic barrier. This is evidenced by Facebook’s slow progression to the 10 million user mark in South Africa, whereas Whatsapp doubled its user base towards the 10 million mark last year,” he says.

Therefore while Facebook has initially said that Facebook Messenger and Whatsapp will remain separate, Strategy Worx expects Facebook to begin to integrate social media functionality into Whatsapp, allowing users to begin to share content as they would on Facebook, changing  Whatsapp’s pure play instant messaging offering into an affordable social communication platform for the developing market, Ambrose says.

The acquisition will make it increasingly difficult for platforms like MXit and WeChat, a Whatsapp rival out of TenCent in China (of which Naspers owns over a third), which are working hard to develop market share locally.

Having doubled their numbers in a year locally, Whatsapp penetration will continue to surge into the local mobile market. With 12 million smartphones and around 20 million feature phones in South Africa, Whatsapp penetration is currently sitting at over 30 percent.

“It will be very difficult for other instant messaging and social media platforms to combat this new partnership, ensuring Facebook’s dominance for years to come,” Ambrose concludes.

Staff writer

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