A couple of months ago, a research report compared Facebook with an endemic disease and predicted its death in 2017. We will not go deep into that research, however, it is a reality that social media platforms need to keep up with current trends in a rapidly evolving industry, otherwise they might end up like MySpace.
Facebook has adapted to the shifting market accordingly, whether it was building a new standalone app (Messenger, Camera, Paper) or buying out their competitors. On the other hand, according to Zuckerberg, building standalone apps is more about giving users a focussed experience.
The art of being relevant
I believe, one of the many reasons why Facebook is developing standalone apps is to stay relevant in an ever-changing world. New technologies, customer behavior, inventions, innovations and laws play a vital role in developing that market shift. It is paramount for tech companies to learn the shift in the market and adapt wisely. When Facebook tried to replicate the success of Instagram and Snapchat by launching Facebook Camera and Facebook Poke they were not thinking about monetization, they were just trying to stay relevant.
If you can’t beat them, buy them
For many companies, buying out potential competitors is a solid strategy. It is far better than spending money on marketing campaigns to outweigh your new rising competitors or dragging them in intellectual property lawsuits. For smaller teams, getting bought out by a company like Facebook is the ultimate goal and a sign of appreciation for a job well done, and for Facebook it is a great new addition to a rising portfolio. Everybody wins.
That is exactly what Facebook did with Instagram and Whatsapp. When Facebook acquired Instagram for $1 billion, many people thought that Instagram deserved that amount. However, that was not the case with Whatsapp. There was an uproar when Facebook bought Whatsapp for a whopping $19 billion. For some tech businessmen, it’s a little bit too much. Many questioned the wisdom of buying a company with only $450 million revenue per year. It is still growing, but it is meager as compared to the price Facebook paid for it. However, Facebook’s aim is to reach every single individual on the planet. Whatsapp is another weapon in their arsenal to achieve that goal.
On the other hand, I see this as a great acquisition. The whole $19 billion was not paid in cash. In-fact, Facebook paid just $4 billion in cash and the rest in stock and restricted shares. It was an excellent use their market valuation to buy a promising company.
Wrap Up
For me, Facebook’s effort to launch standalone apps is about keeping itself relevant in the ever changing market. Facebook does not want to become MySpace by just staying a social media platform. If the goal is to reach all 7 billion people on this planet, then standalone apps like Instagram and Whatsapp will be a great help.
