New Delhi: The Chinese are getting into chat. And the Japanese, and the South Koreans, and the Taiwanese and even, would you believe it, the Indians. WhatsApp has become near-ubiquitous as a programme that allows users on various platforms to engage in instant messaging, at one time the prerogative of those with BlackBerries. But a bunch of developers around the world are snapping at the heels of WhatsApp and other services, aggressively seeking to grab market share. The Chinese-developed WeChat has even signed up Lionel Messi to star in its TV ads.
With millions of users around the world downloading free mobile messaging apps to chat in real time, the 20-year-old habit of paying telecom services providers to send text messages is declining.
US-based WhatsApp is the clear market leader with more than 250 million active users, a number it first disclosed to The Wall Street Journal on 20 June. The figure is higher than what microblogging site Twitter had with a little over 200 million users in December, but lower than that of Microsoft Corp.’s online videoconferencing messenger Skype with around 280 million users in October.
WeChat from China-based Tencent Holdings Ltd isn’t too far behind WhatsApp with 195 million users on 15 May, according to the company’s quarterly results. Nimbuzz, which was founded in the Netherlands but now claims to be fully developed out of India, has around 150 million users, a company official told Mint.
There are other apps such as KakaoTalk from South Korea, Line from Japan, Taiwan’s Cubie, Zalo from Vietnam and LoveByte from Singapore to name a few of the hundreds of such chat apps that are spawning in the apps world. In the Google play app store, the top three-four apps are Line, WhatsApp, Facebook and WeChat.
The valuations of these chat app makers is perceived to be soaring. In April, for instance, Google Inc. was rumoured to be in talks to buy WhatsApp for more than $1 billion (around Rs.5,960 crore today). The buzz subsided a few days later when a WhatsApp official told AllThingsD that there were no such talks.
Meanwhile, the volume of mobile messaging apps, or the so-called over-the-top (OTT) messaging traffic, is forecast to be twice that of person to person, or P2P SMS, messaging by the end of 2013, according to a 23 April report by Informa Telecoms and Media.
“The graph is owned by the user since it’s a user’s phonebook that gives him/her instant access to friends and acquaintances, and whoever s/he wishes to connect with. We consider these apps to be the next gateway to the Internet,” said Vikas Saxena, chief executive officer (CEO) of Nimbuzz.
He added that India has around 20 million Nimbuzz users. Saxena said he has around 100 engineering staff fully devoted to Nimbuzz out of India.
China’s WeChat, which runs on Android, BlackBerry, iOS, Symbian and Windows Phone operating systems, topped the charts as the most downloaded application on Apple Inc.’s App Store and Google play in the Indian market, according to the company’s 23 May media release.
The release also claimed to have 50 million registered user accounts, outside of China. Tencent updated that number to around 70 million in June.
In October, research firm Ovum forecast that by 2016, operators will have lost $54 billion in text messaging revenue because of the increasing popularity of social messaging services (other than SMS, MMS or email) on smartphones, more than double the $23 billion they are expected to have lost by the end of 2012.
Even though SMS and OTT messaging are two different services, and are used in different ways by subscribers, Informa believes that a comparison of the average daily traffic of the two services is relevant, given that OTT messaging is increasingly used as a substitute for SMS in a number of markets.
The first SMS was sent about 20 years ago, with the first commercial service launching a couple of years later.
There were about 3.5 billion P2P SMS users in 2012, said the Informa forecast, compared with about 586.3 million users of OTT messaging. Each OTT user sent an average of 32.6 OTT messages a day, compared with just five SMS messages per day per P2P SMS user, implying that OTT-messaging users are sending more than six times as many messages as P2P SMS users do.
However, the report added that “it is unlikely that SMS will die out anytime soon”.
Ovum underscored the rapid increase in the number of OTT companies, and demonstrated that social messaging is not a short-term trend, but a shift in communication patterns. Operators in Europe and Asia-Pacific will be affected the most, and should be vigilant with respect to OTT messaging activity, the report said.
“Social messaging is becoming more pervasive, and operators are coming under increased pressure to drive revenues from the messaging component of their communications businesses,” said Neha Dharia, consumer telecom analyst at Ovum.
According to the report, WhatsApp has seen its levels of penetration increase in markets such as Singapore and the Netherlands. Ovum believes this level of growth will continue as smartphone and mobile broadband penetration increases, and expects smaller firms such as textPlus, Pinterest and fring to cause further disruption in the messaging space.
“OTT players are changing consumers’ messaging preferences, and the pressure they are exerting on operators’ messaging services is forcing them to offer increased SMS bundles and to experiment with messaging pricing models, further dampening revenue growth,” said Dharia.
Smartphone makers have their own apps too, such as BlackBerry’s Messenger, Apple’s iMessenger and Samsung Electronic Co. Ltd’s ChatOn.
Hike is a home-grown effort, an app backed by Bharti Soft Bank (BSB), a joint venture between Bharti Enterprises Ltd and Japanese operator SoftBank.
The app was launched in December 2012 and crossed 5 million users in April, according to Kavin Bharti Mittal, son of Bharti Enterprises chairman Sunil Mittal and head of strategy and new product development at BSB.
“This is a completely independent company, though, with around 50 employees,” said Kavin Mittal, adding that around 60% of Hike’s users are from India. This means that the app Hike is not restricted to Bharti Airtel subscribers.
Hike, said Mittal, has launched features such as push-to-talk, free sticker packs and “last seen” status.
Privacy and security concerns could, however, disrupt the growth story.
The Delhi Police put 70 phones under surveillance during their probe into spot fixing in the Indian Premier League and was tracking messaging software such as WhatsApp and Blackberry Messenger, according to media reports on 15 May.
Apart from that, when a Chinese company is involved, the security agencies aren’t forthright about expressing concerns about perceived risk. Sure enough, on 14 June, The Economic Times reported that the Intelligence Bureau (IB) had proposed a ban on Chinese chat apps, including WeChat, because they perceive a threat to national security. The report cited an internal note by an IB official.
Also, experts said that WeChat, despite its marketing push, may not find it easy to catch up with WhatsApp in countries outside China.
“WeChat is big in China since it has a government push, but that need not be the case in other countries,” said Mahesh Murthy, founder and CEO of Pinstorm, a social media marketing firm.
According to him, WhatsApp’s success lies in the fact that “it does one thing (messaging) extraordinarily well” while Indian mobile messaging companies “try to overengineer by adding more and more features”.
Others, including Mittal, don’t agree. He believes it’s the added features that make the offering richer.
As for competition with app makers that can throw money at promotions, Mittal and Saxena of Nimbuzz believe these don’t necessarily work. The way mobile messaging catches on is “inherently viral”, Mittal said.