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WhatsApp says they are no threat to mobile operators

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WhatsApp

WhatsAppThe co-founder of US-based messaging starting WhatsApp, Brian Acton, has denied popular notion that their startup is a threat to mobile operators’ revenues. In an interview with Reuters a few days ago, Acton said that instead, they were helping operators move their customers to data packages which would prove more profitable in the long run; “It’s all about the data”.

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Networks definitely are feeling the pinch because subscribers are using the app which sends messages at much less than the standard SMS tariffs operators are used to. In 2011, a technology research consultancy called Ovum released a report in February in which they stated that operators lost $13.9 billion in SMS revenue last year. WhatsApp’s growth is phenomenal. In October 2011 it handled one billion messages a day and just four months later, that figure had doubled.

WhatsApp is not just an SMS replacement; it allows group chats and multimedia content as well. The app is available for most smartphones, including the S40 Symbian platform that runs on low cost ‘smartphones’ like the Nokia X2 series and the Nokia C3 series, both phones very popular in Africa. WhatsApp may have contributed to what so far looks like a very low uptake of Econet MMS locally. The startup earns money from charging users for the service after the first year of use and recently reduced the charge from US$2 to US$1 except for those on Apple’s iOS. The company has been profitable year on year from late 2009.

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The app has exploded in Africa because of the increasing affordability of entry level smartphones & feature phones on the continent. Mxit, which was all the rage in Southern Africa for years, is facing its biggest competitor to date.

There’s a chance though that after the first year of use, the number of African subscribers may significantly decline when the $1 a year subscription fee becomes due. Conventional Western payment methods (PayPal, VISA, Mastercard…) are largely not available to the average subscriber. This is of course a problem that can be resolved, either by WhatsApp itself or by an any innovative African startup on the continent that can come in to collect payment the Africa way and pass it on to WhatsApp the Western way.


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24 thoughts on “WhatsApp says they are no threat to mobile operators

  1. Having tried whatsapp for a while I agree with the points raised in this article, however with google wallet you find that you can easily pay for this app and many other products locally, several financial institutions allow google checkout to work with your card, on the visa side  I can verify that stanchart, cbz , maybe barclays, nmb, stanbic and on the mastercard side I know FBC and kingdom will process requests for payments. Unless things have changed the other option would be to delete the app and re install it should still allow you one year from the date you install.

    1. Never tested it so not sure but thought, WhatsApp would base your one year on the date your mobile number started using the service and not the date the app was installed. Which led me to believe re-installing it wouldn’t have an effect on the expiry of the free period. 
      So what happens when you upgrade your phone, upgrade the app on the same phone, etc… they keep resetting the date? wouldn’t make sense for their business, no?

      1. You are right about that it’s the date the number started using the service was looking at a blackberry that had whatsapp crash and the expiry date is from when the number started using whatsapp not when we recently deleted and reinstalled the app. I guess there’s no option but to eventually pay, I ‘m not sure how many people have had whatsapp expire on them.

        1. Should differ with phone, recently traveled and had to re-install my WhatsApp, and guess what, my free period was extended. It was initially due to expire in May this year, but strangely it now expires in November.

    2. Pay you can, but who has VISA? Not so many people, that includes me. Not because they can’t afford but we are used to not banking. Banks can actually use this to market their online payment offerings.

      1. I agree with you there, I’m of the opnion that if you can afford a smartphone why not pay for premium content from providers like whatsapp doesn’t hurt at just $1 yet if you look how many times people recharge per month it’s maybe $15 plus, locally their are prepaid debit cards which start at just $50, $10 for the card and $40 to use no account needed just a copy of your id and the money gets activated within 24 hours and you can use it on line. This card I talking about is valid for 2 years and attracts no monthly fees. 
        A lot of people don’t believe on spending money on line and they are justified but in reality very few things are entirely free and have Internet associated with them.

    3. I pay for my iPhone Apps using my FBC Mastercard, including Whatsapp. Mastercard debit and prepaid cards allow one to make online payments. Prepaid cards are available over the counter at FBC.

    4. Reinstalling whatsapp won’t work as it licenced to your phone number not your hand set. so you can reinstall it on any hand set and the expiry date will still be the same.

      Interesting fact: My whatsapp registered to a Zim number still worked on when I switched to a Vodacom line during a trip to South Africa.

  2. This is a great innovation for sure. Even local telecom operators should be feeling the pinch now because its uptake locally for those with smart phones is quite tremendous. Even if you pay the data bundle chatting with Whatsapp is very cheap.

    1. hey, thanks for noting that. yeah we kind of use it a lot mostly because we believe all startups are businesses. but yeah, not all businesses are startups. We won’t say the definition of a startup is one everyone agrees upon, coz that’s just not the case.

      What’s your definition of a startup?

      1. howzit, yeah look..its not a bad thing..i just think it kind of blurs the line between a business that starts a new venture to gain momentum in a market, than with an already developed business which has been around for a while, and is generating income and providing substantial services/products to their target market.

        i would describe Ribe as a startup.. but not whatsapp, purely because its been around since 2009..and as of recent, has servers that can handle around 2 million tcp connections at any given time (according to their blog).

  3. Whatsapp shld think twice since Ebuddy XMS, and Samsung ChatOn are coming on board for free!!! Ebuddy XMS is already on iOS, Symbian(S40 and S60) & Android. Samsung ChatOn is already on Android, Bada, Windows, iOS & coming to Symbian soon. I have already XMS on Android & Symbian, its powerful. ChatOn on Android is very powerful. Both XMS and Samsung ChatOn also have web versions so that u can chat from your web browser!!!!!

  4. Surely MOST smartphones owners can afford $1 for whatsapp given how much you save over a year on SMSs. I sent over 20 watsapp messages everyday, thats over 7,000 a year. Convert that to actual SMSs and you will see u get to over $200 a year. The VISA part is not really a big issue if you are serious about buying stuff online. Barclays, CABS, CBZ, FBC (and Kingdom i think) all offer VISA cards. You can open an account just for your online buying. Lets stop this moaning and groaning and support creative “startups” like whatsapp.

  5. I doubt anyone will be paying for whatsapp ‘soon’. In my experience when your whatsapp is about to expire they suddenly extend your free trial period. I had this happen to me in February. My trial was supposed to expire in Feb but then I got a message  saying they extended me to Sept 2012. I’ve had at least 4 people who’ve had the same thing happen to them. As far as I know nobody I know who’s been using whatsapp in Zim has had to pay for it…

    1. True that. I can confirm that I’ve had my expiry date pushed forward, along with other people i know in Zim. I think whatsapp are aware of this. My theory is its a good way of intelligence gathering, kind of like facebook so they wouldnt mind keeping us on there. or am i just being paranoid?

  6. We have Ribe ryt here in Zim..lets be trendsetters not followers all the time..I love watsapp tho 🙂

  7. Whats App should collaborate with Mobile Operator companies in Africa to enable them to just get their $1 annual subscription when one tops up their phone instead of relying on VISA that has a minimum charge of $2 for every transaction in Zim.

  8. Whatsapp has one fundamental difference from most other instant messaging apps; they don’t collect user data. That is, whenever you send a message or multimedia, it is deleted from the whatsapp server as soon as message is delivered. This allows Whatsapp to run an efficient, reliable messaging service.

    Most other cross platform apps like facebook, MXit, nimbuzz and ebuddy binu. rely on advertising revenue. The use up much more of your data bundle mining user data and with repeated user logins. The service is also inefficient and unreliable.

    On the other hand chat clients from mobile phone manufacturers like Black Berry Messenger (BBM) and Samsung Chat; can only send and receive content to phones from the same manufacturer. That means everyone would need have a blackberry.

    While I sms much less I actually use spend much more money on mobile internet for things like facebook, twitter, online news and maps. Whatsapp is an insignificant part of my data charges but it was a factor that drove me to obtain a smart phone. So in my case Whatsapp is actually good for mobile carriers.

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