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    Home » Duncan McLeod » WhatsApp, WeChat in race for IM dominance

    WhatsApp, WeChat in race for IM dominance

    By Duncan McLeod26 January 2014
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    Duncan-McLeod-180-profileThere’s an online land grab of the sort not seen since the dot-com bubble taking place in the global instant messaging (IM) market. WhatsApp Messenger, WeChat (partly owned by South Africa’s Naspers), Hangouts, Skype and BlackBerry Messenger (BBM), along with several smaller players, are in a race to control the future of communication and social interaction on smartphones.

    The stakes are enormous. Whoever is victorious — assuming there is one victor — will own the feature on smartphones with which hundreds of millions around the world spend significant time interacting. Within a few years, the IM user base will be in the billions. The opportunity is vast and the growth rates are nothing short of astounding.

    Just this week, WhatsApp, the world’s largest mobile IM platform, said it now has more than 430m active users, more than doubling the 200m users it had just nine months ago. Its users now send 50bn messages a day, up from 20bn in April 2013.

    Put that into context: media behemoth Comcast, the world’s largest pay-television operator, had just 22m subscribers at the end of 2012. And consumers, especially youngsters, spend hours every day with their faces buried in WhatsApp. The monetisation opportunities are vast. Yet few IM vendors appear in a rush to profit big (and least not yet) while the land grab continues.

    WhatsApp, for example, has long threatened to charge a nominal subscription fee of $1/year — potentially netting it at least $430m/year based on its current active subscriber base — but it has appeared reluctant to charge even such a basic fee to most users, especially those in emerging markets where people don’t necessarily have easy access to online payment mechanisms.

    Another reason could be that WhatsApp has some serious competition breathing down its neck, particularly from WeChat (known as Weixin in China), which is owned by Tencent, the fast-growing Internet sensation in which Naspers holds roughly a one-third stake. Tencent’s performance, along with a weak rand, has lit a rocket under Naspers’s share price, which has more than doubled in the past 12 months.

    Tencent owns QQ, an IM app used mainly on PCs. QQ had an astonishing 818m active users at the end of June last year. The mobile-focused WeChat has more than 236m active users. More people in China use IM than use Internet search engines.

    Tencent is actively pushing WeChat into markets across the world. In Africa, it’s working with Naspers to grow the product in South Africa and Nigeria, and soon in Ghana, Kenya and other markets.

    Brett Loubser, who heads up WeChat Africa, says that unlike WhatsApp, the WeChat app will always be free to use. However, Tencent is already profiting from its users by selling content like casual games or in-game content as well “emoticon” sets — smiley faces, and so on — for a few bucks a pop.

    Brands could also be charged in future to offer their own channels through the WeChat service. In China, the platform is already used by consumers to find deals in shopping malls and to buy airline tickets. Tencent has now announced it plans to offer financial services products, too.

    WhatsApp is leading the mobile instant messaging race, but WeChat, partly owned by South Africa's Naspers, is chasing hard. Image: Jan Persiel (CC BY-SA 2.0)
    WhatsApp is leading the mobile instant messaging race, but WeChat, partly owned by South Africa’s Naspers, is chasing hard. Image: Jan Persiel (CC BY-SA 2.0)

    Though WhatsApp and WeChat look like the two platforms most likely to come to dominate the global IM market, there are many other players nipping at their heels. There’s the cross-platform Skype, which is popularly used for IM by its users. And Google is pushing its Hangouts service, which began life as a PC-based chat program, as an integrated chat service on Android. It recently began incorporating Hangouts with SMS on Android phones in the hope of driving up consumer interest.

    BlackBerry remains a bit of a dark horse with BBM, though it may have come to the party too late by opening the platform to iPhone and Android users only recently. Its value proposition relative to its bigger rivals is also not clear.

    There are raft of smaller — but not insignificant — players such as Japan’s Line and Korea’s KakaoTalk, both of which are popular in Southeast Asia, and even South Africa’s Mxit, though its user base is small compared to the big regional and international players.

    How this all eventually pans out is anyone’s guess. There’s little doubt, though, that when the land grab is over, whoever has emerged victorious is going to profit handsomely.

    • Duncan McLeod is editor of TechCentral. Find him on Twitter
    • This column was first published in the Sunday Times


    BBM BlackBerry Brett Loubser Google Hangouts Naspers QQ Skype Tencent WeChat Weixin WhatsApp WhatsApp Messenger
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