SWOT Analysis of WhatsApp | How is the Business Model of WhatsApp
1. What is WhatsApp?
WhatsApp is a mobile app that allows users to send text messages, pictures, and videos as well as voice calls. The application was founded by Jan Koum and Brian Acton in 2009.
It is an application with which you can chat, call, or text anyone in the world. You can also have group chats, share your location, and send pictures, videos, your contacts, and your Wi-Fi password with just a few taps. It is also free.
It is not just for chatting either, you can also browse the internet using WhatsApp. All you need is Wi-Fi and you are good to go – it is perfect for when you are on-the-go.
In addition to being a free app, WhatsApp also doesn’t require a phone to be SIM-locked, meaning that users can swap their SIM card to a different carrier and still use WhatsApp.
WhatsApp also has a great cross-platform capability, meaning that if a user has an iPhone and their friend has an Android, both can still send messages to each other.
In February 2014, Facebook paid around $19.3 billion for WhatsApp and became a world most popular messaging application in 2015.
2. How is the Business Model of WhatsApp?
WhatsApp revenue mainly comes from advertising and subscription fees. It has a subscription model which gives users a chance to get rid of ads for a fee.
The company’s business strategy is based on high user growth and high user engagement.
This means that WhatsApp needs to keep its user base growing while also making sure that people using the app are spending time there.
This is a powerful and impressive number that dwarfs most social media and messaging apps and shows that this app has a lot of potential for monetization.
WhatsApp Business Model
With over 2 billion users, WhatsApp has the masses which help it generate tons of targeted traffic to its website.
This can be leveraged to introduce paid services such as WhatsApp Plus or add-ons such as voice-calling in order to extract money from its users.
For example, in its early days, when WhatsApp had only few millions of users, founders Koum and Acton introduced paid subscription service to encourage users to pay $1 per year in order to get rid of advertisement.
WhatsApp does not charge for registration, thus earning nothing from the huge number of users who sign up using their phone numbers.
But, in order to make money, WhatsApp made it obligatory to use a mobile phone number in order to register with the app.
This means that users were forced to pay for SMS services in their respective country in order to activate their account on WhatsApp. The founders of WhatsApp plan on introducing other ways to make money.
However, monetizing user engagement is no easy task, especially when it becomes necessary to generate revenue from services beyond text-messaging and voice calls.
3. How Does WhatsApp Makes Money?
a) Subscription: In its early days when WhatsApp was still only a messaging app, it monetized via subscriptions to remove advertisement from the application.
In order to register on the application, users had to provide their mobile number at least once in order for WhatsApp to verify or verify their identity.
Subscription is a payment made in exchange for a service that gives the user access to a certain amount of content.
b) Advertisements: Today, WhatsApp runs advertisements on the platform. It shows the company’s advertising to users all over the world.
c) Payment: WhatsApp will charge for money transfer services in order to generate revenue.
WhatsApp Payments. It has recently introduced payments to its application in India via a partnership with Indian company Paytm which enables users to send money through their phone numbers.
d) Voice calls: The voice calling feature was introduced in April 2015. WhatsApp voice calls are currently free of charge, but this has not been confirmed for how long it will remain so. In the future, WhatsApp may introduce a fee for this service to generate more revenue.
Intended for use as a communications tool, WhatsApp is being used as a marketing channel via companies buying “sponsored messages” from it.
e) WhatsApp Pay: WhatsApp has partnered with PayPal to introduce a payment feature to its app, as well as a new financial service for WhatsApp users that allows them to send money from their bank accounts.
f) Inbox: Inbox is a new way for WhatsApp to go beyond text messaging and voice calling. The “Inbox” feature includes additional features such as stickers, animated photos, voice notes and videos.
This is a rather interesting way of making money from WhatsApp’s users which they can download on their smartphones or tablets.
4. WhatsApp Revenue and Financials
WhatsApp revenue is essentially non-existent, growth has attracted investment.
Following eight months of conversations, Sequoia Capital invested $8 million in April 2011 and an additional $52 million in February 2013, WhatsApp was valued at $1.5 billion after the investment.
When Facebook paid $19 billion for WhatsApp in February 2014, it completed its biggest buy to date and one of the largest tech purchases in history.
Brian’s proposal was turned down by Facebook, causing him to quit in September 2017 before his shares vested, resulting $850 million loss.
Jan Koum followed suit, quitting once his vesting period had ended in April 2018.
WhatsApp will have 1.3 billion monthly users by 2020, up from 1.2 billion in the middle of 2017.
In November 2017, Forbes raised their valuation for WhatsApp from $5 billion to $15 billion, with an average income per user of $4 to $12.
WhatsApp is a mobile instant messaging service that transmits and receives messages over the internet.
WhatsApp, with approximately 2 billion monthly active users as of 2021, has surpassed Facebook Messenger (1.3 billion) and WeChat (1.2 billion) as the most globally popular mobile messaging service.
After Facebook and YouTube, it is the third most popular social network.
5. WhatsApp Competitors
WhatsApp is a standalone messaging and social media platform and the user experience it offers is enough to keep users hooked. The app’s major competitor in the instant messaging space is;
a) Snapchat: Snapchat is another instant messaging service for smartphone users which has gained popularity in recent years.
Snapchat messages are deleted by default after they are received, but messages can also be saved manually to the device’s storage. When a screenshot of messages is taken, the sender is notified.
b) Skype: Skype is a popular instant messaging service for smartphone users. It allows people to communicate using an instant messaging app, as well as voice calls and video calls via the internet.
Skype works on devices with a camera and microphone, such as desktop computers, laptops, tablets, phones and smartwatches.
c) WeChat: WeChat is a popular Chinese messaging application. The app allows its users to send text messages and multimedia files to other users, make calls to landlines and mobile phones alike without usage of internet connection.
d) Telegram: Telegram is a rapidly growing instant messaging service for smartphone users. It is an app which sets up connections with friends quickly and easily without the need of internet connection. The application allows users to send messages to each other privately, with self-destructing messages sent over time.
e) Discord: Discord is an internet-based message service which allows its users to communicate via text. It is an alternative to Skype, Google Hangouts and Slack, which are all internet-based applications for instant messaging.
f) Facebook Messenger: This instant messaging application allows people to communicate with another user by using their phone’s camera or by entering or texting a friend’s phone number directly, making it simple for users to send messages without having an internet connection.
g) Kik: Kik Messenger is a free mobile messaging application for smartphones and tablet computers. It uses a smartphone’s existing data or Wi-Fi connection to send messages to other Kik users, or to other mobile or landline telephones at no charge.
h) Viber: Viber is an instant messaging application for smartphone users.
6. WhatsApp Business and Marketing Strategies
WhatsApp have the strategies that attract many users across the globe, these are;
a) Build a Contact Database: WhatsApp has built a contact database users can connect with. They do this by collecting personal information from the users and also the information of their contacts that they want to be informed about.
b)Marketing: WhatsApp has spent a lot of money on marketing and branding and still rising in the market it used to be for free for all users.
c) Dedicate Advertise: WhatsApp will spend money via banner ads on mobile devices, apps, websites and other software it has partnered with.
d) Brand Development: WhatsApp is in the business of marketing and branding to ensure customers can easily recognize and be attracted to its name.
e) Live in the Platform: By integrating their service in several platforms like social media (Facebook and Twitter) and e-commerce (Amazon and Flipkart), it has been able to grow its brand more effectively.
f) Incentives: WhatsApp will provide free leads for users of its services who have downloaded it from a specific platform or website or paper that has been given out.
g) Integrate WhatsApp with other Applications: By integrating their service with several social networking sites like Google+ and Yahoo, it has been able to grow its brand more effectively.
h) Achieving Brand Thinker via Innovative Marketing Strategies: WhatsApp is an innovative company that keeps coming up with new ways of attracting customers. This is achieved through their marketing strategies, which are tailored to suit the needs of specific groups or businesses.
i) Increase of WhatsApp’s Market Share: The growth of WhatsApp has been largely due to the massive surge in smartphone usage over the past few years. This has made it even more convenient and easy for users to communicate with each other.
j) Distributing WhatsApp: By distributing their service via smart phone carriers and app stores, they found a more genuine and natural way of promoting their brand. This is achieved by partnering with other companies that have a large number of users.
k) Great Branding: WhatsApp has spent a lot of money on marketing and branding and still rising in the market.
7. SWOT Analysis of WhatsApp
· Strengths of WhatsApp
a) All the tools are very easy to use: The application team had thought through all the possible situations of using WhatsApp and designed the application accordingly. All you need to do is to enter their mobile number for verification, but that is it.
The application has some additional features like animated stickers, animated photos, voice notes and videos which are certainly helpful
b) WhatsApp is free: It costs nothing to use the app, the only payment they ask for is their subscription fees. Which is rather fair considering its popularity.
c) Easy to use: WhatsApp is very simple to use, which makes it easy for even the most tech-challenged users to use it.
d) Quick Messaging: The application allows users to send messages in no time, which would make the user experience very smooth.
e) Facebook Integration: WhatsApp has partnered with Facebook to provide users the ability to send messages through the social network which is convenient for many.
f) No advertisements on the screen to annoy the use: The application does not have any advertisements that are annoying to the users. All the money is earned through payments that are made for upgrading their services.
g) The application will not use up precious memory on user’s phone: Unlike other applications, WhatsApp uses very little memory on the user’s phone, thereby keeping other applications to do their work.
h) Helps in keeping in touch with friends who live far away: The application helps users to keep track of one another which is necessary for people who live apart.
· Weaknesses of WhatsApp
a) No privacy: The application does not assure users that their account will remain private, however, it does provide complete privacy for all private instant messaging accounts.
b) Its instant messaging service is unsecured: As mentioned in the last section, WhatsApp’s Instant messaging service is not secured which makes it prone to viruses and hacks that might affect your account.
c) For an app with so many users, it can be difficult for them to keep track of the spam messages being sent every day.
d) It can be dangerous to use on public places like railway stations or airports where the users are prone to pickpockets.
e) After an update, they have started to enforce their terms and conditions, which is quite different from the original version.
f) Every WhatsApp account has similar patterns of usage which makes it difficult to predict who is most likely to be hacked.
g) WhatsApp does not have any special security features that are not used by other instant messaging apps.
· Opportunities of WhatsApp
a) Internet Penetration: The internet penetration in countries like India and Brazil is still quite low, which means that there is a great opportunity to get the app and connect with more people and advertise their services.
b) Development of Technology: The application is currently the only instant messaging app which is using internet based technology, which means that there is a great chance of the application becoming more sophisticated and finding its place in the market.
c) Infrastructure Development: The rapid rise in WhatsApp’s popularity might help in improving their infrastructure development which will be beneficial to all its users.
d) Connection with other applications: As per mentioned earlier, WhatsApp has partnered with Facebook to provide users with an easy way of sending messages through the social network.
e) Security and privacy of data: The application has a user base of over 2 billion which means that there is a huge amount of data which can be used to serve better ads and help companies in making their products more popular.
· Threats of WhatsApp
a) A sudden hike in the cost of using the application on a particular network could drive away a lot of people from using it who cannot afford to pay for their services.
b) WhatsApp also has quite a few spammers among its users, which means that if they ever get detected, it can be very dangerous for them to continue to use the app.
c) Users who are habituated with an instant messaging app can be very difficult to sway from it especially if they have become more familiar with it than any other application.
d) Competition by other mobile messaging apps: WhatsApp has a number of competitors in the mobile messaging apps segment, however, they all require a Wi-Fi connection and only work on smartphones.
e) Sometimes users might not like the way they private information private is handled and can thus leave the application.
f) Users might get irritated with the advertisements that they will have to deal with or even with the subscription charges that they will be required to pay if they want to use some special features on WhatsApp.
g) They might face some security issues: Since they store a lot of user information and data, if it wasn’t secured properly, it can mean trouble.
h) Some government agencies might not like the fact that their community is growing so rapidly and might try to put a cap on the number of users.
i) At times there could be technical issues with the servers or even with the hardware of their clients which could cause problems for users who do not have access to Wi-Fi networks.
j) The company might want to charge for their services which could mean that they will have to reduce the number of users who are accessing it at no cost.
8. FAQs of WhatsApp
What is the Future of WhatsApp?
The future of WhatsApp looks very promising from both the user and the company’s perspective. It is one of the most used messaging apps ever created with over 2 billion users worldwide and growing.
In fact, it is the most popular messaging app in some regions such as India and Europe.
How much did Facebook pay for WhatsApp 2014?
WhatsApp’s founders attached a $19.3 billion acquisition price to Facebook’s announcement of its plans to acquire WhatsApp in February 2014.
What is WhatsApp Web?
WhatsApp Web is an unlicensed variant of WhatsApp, which allows users to use WhatsApp on the computers which do not follow any of their terms and conditions.
How many countries WhatsApp in?
In 2021, WhatsApp is available in over 180 countries and 40 languages.
Encryption is a big deal in the world of messaging. If concerned about securing communication, WhatsApp, in partnership with Open Whisper Systems, has put in place a state-of-the-art end-to-end encryption protocol.
Now messages can only be read by the intended recipients and no one in between.
How to make backup WhatsApp Chat History?
There are two different ways to back up the chat history. User can either do it from their phone or from WhatsApp website itself.
Will WhatsApp number appear on my regular phone bill?
WhatsApp allows users to call regular mobile numbers at no extra charge. Users can choose to pay for calls (in India) via voice credit or data credits, which are available at discounted rates.
How many People use WhatsApp?
WhatsApp has over 2 billion users worldwide as of 2021. In the same year the number of users in US alone is 75.1 million.
WhatsApp Security issues, what to do?
Most commercial messenger apps use its own servers and don’t use public Wi-Fi for encryption which is why the security is prone to hacking.
But user can always choose other secure options such as: Signal or Text Secure.
WhatsApp uses a standard messaging protocol called XMPP and very little has been altered in the latest version of the app.
How does WhatsApp make money?
WhatsApp makes money from in-app purchases and advertising. In-app purchases include add-ons such as stickers, themes, games, and team chat options.
The latest version of the app introduced a new feature called Chat Heads which is a combination of a live chat window and messaging app. It allows users to access a whole range of features in one go.
How does WhatsApp run?
WhatsApp uses web servers to provide features such as push notifications and multi-person chats.
What are the WhatsApp Features & Benefits?
WhatsApp offers a number of different features, some of which are listed below.
a) Send text messages to other users free of cost
b) Enjoy group chats with up to 200 people
c) Share videos, images, audio clips or documents
d) Send or receive WhatsApp Stickers
e) Use WhatsApp on Windows, Linux desktops
f) Enable two-step verification for additional security
g) Send documents, audio clips, videos and more to users
h) Personalizing status
i) Send voice messages via WhatsApp
j) Sharing location with other WhatsApp users
k) Updating profile photo and cover photo for free.
What is the WhatsApp Business?
WhatsApp Business allows you to send text, video and voice messages to employees for free. WhatsApp Business users can send unlimited SMS, MMS and chat messages.
They can also park up to 2GB of data per month on their mobile phones and personal computers.
How can I add a friend on WhatsApp?
To add friends on WhatsApp user need the username and the phone number of their phone which user want to add them. User can add anyone by sending them a message via WhatsApp or via their phone.