Positives for Facebook/WhatsApp

• Improves FB’s mobile strategy further by giving it an access to next billion users of whatsapp, (450 mn users currently)
• Access to new Market Segments: connect to Younger uers, Who it seems are moving away from FB
• Access to Emerging Markets (India, Latin America, even Europe): WhatsApp has more active user base across emerging markets than Facebook.
• All conversation through one platform, positive synergy for both companies. Whatsapp might be able to move from subscription based revenue to platform based and FB will find new ways to engage with new/ existing FB users
• Integrating both these services with payment gateway….can be an effective platform for mobile commerce and with such a large userbase it can generate an entirely a new revenue stream
• We have seen use of Whatsapp across healthcare services in India (sharing documents to save time over whatsapp etc….more vertical use are an opportunity

Negatives for Facebook/WhatsApp

• Still big question mark over FB’s mobile strategy as to how they are going to intigrate and create value if Whatsapp is going to work an an independent and autonomous unit
• Lack of proper Monitization Strategy: will be difficult if you move from free to freemium / paid model as it does not have a clear monitizing strategy.
• High cost of Acquisition: What if the company does not turn out to be a good buy –high price per user, no montization strategy, lower growth than anticipated, privacy issues–, overall costs can quickly become a drain on FBs resources.
• Whatsapp USP is its simple user experience, any feature tweak by FB can alter the future user experience and growth/ usage
• Too much info in the hands of one company….can be dangerous as they already know and will know more about a user
• Bypassing Telcos: Declining traditional messaging revenues will put them at loggerhead with Telco’s unlike BB, which is considered as a revenue generating partner for Telcos esp. in Enterprise space.
• Competition: Whatsapp losing advantage with entry of BB (considered more secure, strong in enterprise segment, control rests with user unlike whatsapp) and expansion of other services providers like wechat becoming threat to whatFB is looking at next 10 years as a timeframe for this acquisition lifetime, however considering their own evolution 10 years is a long term bet which might not materialse considering the changes to payoff
• Low Entry barrier: not costly and difficult to create a free messaging app, hence this space will see more fly by night operator creating truble to whatapp and other establshed players

Implications for BlackBerry

• Competition
  • It is fase becoming a hypercompetitive space with no clear monitozing outcomes
  • Emergence of a very large well financed competitor, not good for BB
  • BB’s lack of strength in prosumer/consumer space and declining user base can be a mid term hurdle to fight a large entity like FB
• BB does not seem to have the kiind of social platform as the joint entity and lack clear motizing strategy for BBM
• Security: This merger will still not alley the privacy fears and hence BB’s strength in this area can help it to create its own niche across Prosumers and Enterprises as well as SMEs/ Micor SMEs