A little over sixteen hours ago Facebook’s recent $19 billion What’s App acquisition caused a firestorm in the media world. Hundreds of other outlets have already done you the service of dissecting the deal and speculating on on the reasons behind it. But after a nice buzz on in one of my What App chat rooms (of all places…), the valuation model chatter died down and I chimed in with:
“Yo. I got a message recently about renewing my What’s App subscription in 3 days. I don’t think I’m going to renew…”
$1 Yearly Subscription Too Much
It’s hard to believe SaaS has come to a point where a great product at a very reasonable price can have its integrity cross-examined so honestly. Well at first glance it’s hard, but once you take a few step back a different pictures stars to emerge.
What’s App is undeniably a great mobile client that efficiently solves the global & cross-device messaging problem but then again so is: Viber, Google Hangouts, FB Messenger, BBM, Skype, Wechat, Tango… Although the product has a great value proposition, it unfortunately isn’t unique.
There is a cognitive dissonance in the market place. Competing messaging clients manage to provide the same service with a (for now) $0 price tag. Users will undoubtedly line up at checkout, scratch their heads and ask themselves what’s the difference?
Troves of other SaaS companies are monitoring developments and collectively holding their breaths to see if What’s App’s huge network effect- 450 MAU’s- is enough to justify the price tag. Any success with this mobile monetization strategy will support a viable alternative to the mostly standard ad driven model. As for me, I’m not sure yet if I will pay that buck, but I now have 72 hours to figure it out.