We know WhatsApp Messenger as an instant messaging app for smartphones that operates under a subscription business model. It is a proprietary, cross-platform app that gives users the ability to select feature phones to use the Internet communication purposes. In addition to text messaging, WhatsApp can be used to send images, video and audio media messages. The location feature can also be used through the use of integrated mapping features.
In February 2014 Facebook (News - Alert) acquired WhatsApp. A few months later in October, WhatsApp was cited as being the most globally popular messaging app. At that time, it had more than 600 million active users with more than 70 million residing in India. That number has since grown to over 700 million active users.
With this in mind, why is WhatsApp preparing to offer voice calling for the first time? Analysts and commentators are looking at this move as somewhat of a spectacular event. The problem with this is that we already have Voice over IP (VoIP) apps. So why is WhatsApp offering this service now and where does it plan to focus its attention?
The obvious answer to the first part of the question is that WhatsApp is looking to increase its revenue share. When you consider that analysts believe that in just three years VoIP will become 1.3 trillion strong on a worldwide basis, it is easy to understand that essentially, the company is just going where the money will be.
The second part of the question is a little more difficult to answer. All of the major carriers in the U.S. and Europe are already offering VoIP services, so unless WhatsApp has something special to offer, what market share does it expect to gain? The apparent answer would be that WhatsApp will focus on developing markets.
Unlike established markets, emerging markets tend to be rural areas located in rough terrain where it is difficult to have landlines. One of the developing markets is India and as I mentioned above, WhatsApp has 70 million active users in that region. The problem here is that there are already several companies, such as Nimbuzz (News - Alert) and Viber.
Not only have these companies been offering VoIP services, they understand that their customer base has low-cost handsets with low memory and low battery. That gives these in-territory VoIP apps an advantage. Due to years of work to improve the voice codecs and media engine, refining them to suit lower cellular data bandwidths and stop battery drain, so that voice quality can be maintained on even low bandwidth networks, there is a system in place that works well. They have also made adjustments to ensure that VoIP works even on sub-$100 Android (News - Alert) devices.
Kevin Walsh, who is the forecasting director at GfK believes that "Our forecasts show seven new entries in the top 10 smartphone markets for 2015, in terms of growth by value - and these are all emerging markets, which have overtaken developed markets where smartphone saturation is nearing completion. The reason for emerging market dominance of smartphone growth in the next year is that pricing is reaching the sweet spot of $30 to $50. This brings a major population segment (earning $2,000 to $4,000) into the market."
The type of devices that will be used in these emerging markets needs to be taken into consideration. Consideration also needs to be given to how these networks operate. One reason that Apple (News - Alert) has stayed away from China for so long was that it would have had to modify its iPhones to operate within the Chinese standards. These are all things that could, in one way or another have an effect on WhatsApp’s plan to offer voice.
While there is no doubt that Western corporations are looking to establish a presence in developing and emerging markets, they may find that the rocky terrain will be too rough to handle. Regions such as India, Africa and the Middle East have been developing an infrastructure designed especially for their technological needs. Will WhatsApp be able to compete in these regions?
Edited by Alisen Downey