In the video below, Motley Fool tech analyst Eric Bleeker and Max Macaluso discuss the future of messaging apps versus social networks, as well as investment-trend predictor Mary Meeker's latest slide deck, which shows the vastly different ways Facebook (NASDAQ:FB) and Whatsapp users communicate.
David Sacks, founder/CEO of Yammer and COO/chief of product of PayPal, tweeted this back in February:
Both WhatsApp and Secret represent the ascendency of the phone book over the friend graph. It's back to the future.— David Sacks (@DavidSacks) February 19, 2014
Basically, with Facebook, you're communicating with a large number of people, perhaps somewhat infrequently; with these messaging apps, you're communicating with a smaller but likely more intimate number of people on a more regular basis.
Eric and Max discuss how well this observation helps explain Facebook's $19 billion buy of WhatsApp. However, another problem that arises is that while Facebook users are fairly locked in to the service, companies like WhatsApp that use a phone book for finding friends and contacts have few switching costs. That could make monetizing users in the space very difficult as they flee to new platforms when ads or other revenue opportunities are introduced. That's a significant risk that will be tested in the years ahead, as Facebook begins increasing WhatsApp monetization, which was close to non-existent when it purchased the company.
To see the full discussion, watch the video below.