Cape Town - Facebook's acquisition of WhatsApp represents a
direct threat to local chat application Mxit, says an analyst.
Facebook announced on Thursday that it had bought WhatsApp for the huge sum of
$19bn, including $4bn in cash, as the California-based web titan looks to grow
to the next billion users.
WhatsApp has around 450 million active users and the fact that the chat application
is growing in emerging markets was probably a determining factor in Facebook's
"WhatsApp's 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," said Steven Ambrose, Strategy Worx CEO.
WhatsApp has already grown exponentially in SA with a user base of 10 million
and Ambrose said that the tie-up with Facebook will make it increasingly hard
for companies like WeChat and Mxit.
"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," he said.
At a continental level, smartphones - or even feature phones - are still in the
minority and expectations are that as people migrate toward smarter devices,
WhatsApp could experience a surge in growth as users avoid the cost of SMS.
"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," Ambrose said though he conceded that internet data was still a
cost barrier in developing markets.
WhatsApp is a particularly good fit for Facebook because the former's audience
is young and growing. They also spend a significant amount of time engaged with
As teens in the US turn to networks such as Twitter, WhatsApp may give Facebook
a new energised audience, with a focus on mobile devices.
Facebook has said that the WhatsApp will remain independent, but Ambrose thinks
that there will be some integration in the platforms.
"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
For the latest on national news, politics, sport,
entertainment and more follow us on Twitter and like our Facebook page!