Facebook acquired mobile instant messaging service WhatsApp a few weeks ago for $19 billion, a sum that raised eyebrows even among multi-billion dollar corporations. Facebook founder Mark Zuckerberg stands by the purchase, justifying its cost because large users bases are so valuable, and said it could have sold for even more. Reportedly, Microsoft was considering buying WhatsApp also, but perhaps not for such a price.
"Microsoft would have been willing to buy it, too. I don't know for $19bn, but the company's extremely valuable," said Microsoft founder and philanthropist Bill Gates. Gates recognizes the value of having a huge install base for an app or platform, and that can be worth more than the product itself.
Paying over the odds to acquire users can pay off in the long run, as they continue to feed that product, but can also be converted into other revenue streams within the company's services and products. The Microsoft founder admires what Zuckerberg and Facebook accomplished with the move.
"I think [Zuckerberg's] aggressiveness is wise - although the price is higher than I would have expected. It shows that user bases are extremely valuable," said Gates.
The billionaire described the Facebook founder as "more of a product manager", though it was not meant in an insulting way. He explained that Mark likes to "start with products" as opposed to his own specialization, being a coder. For comparison, he described the deceased Steve Jobs as one who liked to start with aesthetics--all varying ways to do business, all proven extremely successful.
Will WhatsApp prove to be worth the cost? We'll have to wait and see. For now, Zuckerberg and Facebook are adding voice calling functionality to the app and planning how to best benefit from having a huge new user base.
Source: The Guardian
