What is What's App?

What's App is an instant messaging app for smartphones that allows users to send and receive messages without the need for a cellular company text messaging service and fees. Instead of using your cellular text messaging plan, What's App uses your Internet connection to transmit and receive messages.

What's App was in the news recently because Facebook agreed to pay $19 Billion, yep, that's right, billion, for the company. So here's how What's App works and what it does.

What What's App Does

What's App allows subscribers to send text messages, videos, pictures, voice messages, and share their location with other What's App users. It's called a cross-platform design because the app works on different brands of smartphones, iPhone, Android, Blackberry, Windows, and Nokia.

How to Start Using What's App

What's App is free to use for the first year, then 99 cents a year for continued use of the app on your smartphone when the free year is up. After downloading the app from an app store to your smartphone, you're prompted to create a username and subscribe to the service. Then What's App scans your contact list to see if any of your contacts are already What's App users, and if they are, automatically adds those contacts to your personal What's App contact list.

What's App History

Developed in 2009 by Brian Aston and Jan Koum, What's App grew quickly to over 200 million active users by February of 2013. Facebook acquired What's App in February of 2014 for the hefty sum of nineteen billion dollars. This acquisition is considered the largest purchase of a venture capitalist backed company ever seen in the business world. Due to Facebook's loose privacy policies, What's App actually lost many users after it was purchased by Facebook. However, they also gained many users thanks to the media attention in places where What's App was not as well known. Shortly after the announcement of Facebook's acquisition of What's App users experienced a loss of service, which led to outrage throughout the world of social media.

Why What's App is Popular

In spite of the problems and questionable violations of privacy, What's App has allowed its users to stop paying their phone carrier for SMS service. Users pay What's App one dollar for a year of service, whereas most cell phone carriers charge around five dollars per month or more for a text messaging service.

What's App also adds some useful features that don't exist in cellular texting, like a distribution list, group chat, customization tools, and adding a location to a message.

Since most phone carriers charge higher rates for international messaging, What's App is a great way for people who travel or have family abroad to save money.

Is it Worth $19 Billion?

I read reports after the Facebook announcement that Google had approached What's App with a $10 Billion offer, so What's App was obviously a buyout target before Facebook closed a deal. So why was everyone fighting over a messaging app?

If you run a Social Networking company, say like Facebook, or a search website like Google, your biggest asset is the ability to continue to attract people to use your services so you can display advertising. Think of it like a television station that has to compete for ratings, and the prices they are willing to pay for the broadcast rights to major events like the Superbowl, the Olympics, or the World Series. These are events that attract millions of people and allow the TV station to make money from advertising.

Now think of what would happen to a TV station if a competitor won the broadcast rights to any of the events I mentioned above. The winning TV station not only gets the money from the advertisers, they also have the ability to run promotions for their own new shows during the event.

Keeping people tuned to your station is the idea, and if Facebook had let What's App fall into a competitor's hands, then the competitor would have access to all the millions of What's App users, and while Facebook might not want to send them ads in What's App, Facebook can reach these users and connect them to their Facebook friends, and they have the time to figure out how to make more money with What's App without worrying about competitor buying the app.

Does this make a lot of sense to everyone? Maybe not, but if you look at all the people with smartphones in their hands, and it kind of makes sense to have an app you own that so many people use every day.

Not a subscriber? Don't miss a single issue: