What's up with WhatsApp? Mexico City sheds some light. (+video)(Read article summary)
WhatsApp is the most popular texting service in Mexico. Now Facebook declared it has a market value in the billions.
Upon arriving in Mexico City last fall and stepping into this megalopolis for the first time in nearly three years, I noticed a few changes: More express buses zipping along dedicated lanes, fewer bootleg DVD salesmen hawking Hollywood flicks, and subway riders staring into the screens of their smartphones.
I grabbed a meal with a friend shortly after touching down. She asked me if I had WhatsApp yet.
"You don't have Whats?" she said scoldingly, as if I were someone who'd gone to the beach without sunscreen.
It’s the most popular texting service in Mexico, and as of yesterday Facebook declared that it has a market value in the billions. The smartphone app, which is little known in the US but widely used across Latin America and the developing world, was purchased by the social network for $19 billion. That’s over twice what Microsoft paid for Skype in 2011.
The app has a streamlined look with an almost translucent but busy background full of pictures of bicycles, astronauts, and other images. Some in Mexico have told me that what sets the app apart is the speed with which it sends messages. There may be some truth to that, but the main driver of its popularity is, in fact, its fame. Users can only send messages to other users inside its ecosystem, forcing more and more people to declare an allegiance.
If you're a new smartphone user here, WhatsApp is the first messaging application you will download – not Viber, not Skype, and not any other of the multitude of options. Why? Because that's what your friends use. The app's value for Facebook is its 450 million global users – people who mostly live outside the US.
The $19-billion price tag might surprise American observers accustomed to easy texting, but the reality of phone plans in places like Mexico City tells a different story. Here, monthly cell phone plans are not as common as in the US, where unlimited texting is assumed. Many Mexican users buy phone credit – usually at a local convenience store – which they then gradually consume. A text message gobbles up about $0.07 on the country's Telcel network (owned by billionaire Carlos Slim), even though it costs the company a small fraction of that amount.
WhatsApp, along with similar products like Viber and Skype, offers another texting option. Internet-based messengers allow their users to exchange texts and make calls via a simple wifi or data connection. Most of these alternatives are free.
And that brings up the big question surrounding Facebook's acquisition of WhatsApp: How will it monetize its new half-billion-strong user base? Charging a fee could be a nonstarter for Mexican users. As one local told me, part of WhatsApp's appeal is "it's cheap."