Inside WhatsApp – How does it make money?



About 2 years ago, BB (BlackBerry) phones were widely used in Corporate world due to its secure email and messenger services, but Whatsapp has changed everything. WhatsApp Messenger is a cross-platform mobile messaging app which allows you to exchange messages without having to pay for SMS. WhatsApp Messenger is available for iPhone, BlackBerry, Windows Phone, Android and Nokia.

As per wikipedia today WhatsApp delivers on an average 10 Billion messages each day. Users can share texts, locations, and media such as photos, videos and audio apart from an instant messaging service. According to the Financial Times, WhatsApp “has done to SMS on mobile phones what Skype did to international calling on landlines.”

But how can Whatsapp operate its service without selling any ads? Somewhat points we found about their running cost and funding…

1. Employee strength is very low. WhatsApp employs only 11-50(very less number) engineers who work on the development of the application or involve in customer support. (taken count from linkedin)

2. WhatsApp does not spend a penny on advertising, again saving costs. They rely on word of mouth publicity. In India, BlackBerry mobile were widely used for its messenger service , but its cost was high and android market has changed everything. We can say WhatsApp has killed BB market in India.

3. WhatsApp’s website is simple. Which means they do not spend here to maintain it.

4. Reliance Communications has announced its exclusive partnership with WhatsApp in India. Under this partnership Reliance Communications has launched a WhatsApp Plan, for all Reliance GSM subscribers. Thus, WhatsApp got money via partnership with telecom companies.

5.  WhatsApp, has secured $8 million in financing from Sequoia Capital, and possibly other investors. This funding keeps the company afloat despite high running costs (data storage, servers etc.)

6. The cost of downloading WhatsApp on iTunes is only 99 cents, and on other platforms is available for free. But there is a catch, WhatsApp is free only for the first year. Second year onwards there is a fee for $1.99 for a period of 3 years, and this is where they are going to make money. Currently WhatsApp has over 100 million subscribers, and suppose 80 million are non-iOS users, they will earn a cool $160 million easily. But in India however even after completion of one year they are extending some months limit for free usage every time.


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