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Whatsapp Video Calling Feature - Threat To Skype

Facebook subsidiary Whatsapp messaging application came out with video calling feature to enhance its competitiveness. Recently, Facebook notified all Whatsapp user that it will access the information of user and intention of doing so is to offer contextual advertisement. Till now Whatsapp is advertisement free but its matter of time before they will start converting their 1 Bn userbase with 700 million daily active user to convert them as cash cow. Globally many companies are offering messaging application along with video calling and as per the my analysis more than 3.5 billion users are using messaging applications as per their choice.

I see Whatsapp move as strategy to kill the competition so that they start monetizing the platform. The technological robust competitor Skype is also offering voice and video calling which also include paid service and generate undisclosed revenue for Microsoft. Skype is mostly used by the prosumer segment where Whatsapp is trying to break the wall. Skype total user base 740 million but daily active user base stands at 280 million. Skype is generating revenue through paid service, advertisement and must be generating handsome EBITA on the service.

The newly added video  feature in Whatsapp posses all the capability to attract Skype paid user base. Being a part of most of the Android devices, Whatsapp easily gets the user base whereas Skype need to invest in order to acquire user base.

In current Marking module of mobile applications, it is very important that companies goes for embedding deal with Smartphone player which is also very cost effective compared to other mechanism of user acquisition.

Whatsapp move will directly impact Skype revenue generating potential down the line and Skype needs to change its strategy of user acquisition to mitigate any competitive risk. Skype should go for the Smartphone embedding partnership the way UBER just concluded in India with Micromax. Failing to do so will impact Skype dearly which will be visible in next six month when user will move from Skype to Whatsapp.

Whatsapp move is nothing but to kill competition and biggest loser will be Skype.
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About Devendra Prasad

20 years plus industry veteran of domestic and international ICT domain with the expertise in Business, Technology, Strategy and Analysis. Specializes in forecasting impact analysis, trends and recommendations for Investments, Technology and Regulations.
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