Create personal profiles. Build networks of friends. Share photos, videos and music.
might sound precisely like Facebook, but hundreds of millions of
tech-savvy young people have instead turned to a wave of
smartphone-based messaging apps that are now sweeping across North
America, Asia and Europe.
The hot apps include Kik and Whatsapp,
both products of North American startups, as well as Kakao Inc's
KakaoTalk, NHN Corp's LINE and Tencent Holdings Ltd's WeChat, which have
blossomed in Asian markets.
Combining elements of text messaging
and social networking, the apps provide a quick-fire way for smartphone
users to trade everything from brief texts to flirtatious pictures to
YouTube clips - bypassing both the SMS plans offered by wireless
carriers and established social networks originally designed as
Facebook Inc, with 1 billion users, remains by far the
world's most popular website, and its stepped-up focus on mobile has
made it the most-used smartphone app as well. Still, across Silicon
Valley, investors and industry insiders say there is a possibility that
the messaging apps could threaten Facebook's dominance over the next few
years. The larger ones are even starting to emerge as full-blown
"platforms" that can support third-party applications such as games.
be sure, many of those who are using the new messaging apps remain on
Facebook, indicating there is little immediate sign of the giant social
media company losing its lock on the market. And at a press event this
week, the company will unveil news relating to Android, the world's most
popular smartphone operating system, which could include a new version
of Android with deeper integration of Facebook messaging tools or
possibly even a Facebook-branded phone.
But the firms that can take over the messaging world should be able to make some big inroads, investors say.
interactions are conversational in nature," says Rich Miner, a partner
at Google Ventures who invested in San Francisco-based MessageMe, a new
entrant in the messaging market. "More people text and make phone calls
than get on to social networks. If one company dominates the replacement
of that traffic, then by definition that's very big."
Facebook spokespeople declined to comment for this article, citing this Thursday's planned announcement.
big challenge is reeling back users like Jacob Robinson, a 15-year old
high school student in Newcastle upon Tyne in the U.K., who said the Kik
messaging app "blew up" among his friends about six months ago. It has
remained the most-used app on his Android phone because it is the
easiest way for him to send different kinds of multimedia for free,
which he estimated he does about 200 times a day.
Robinson said he trades snapshots of his homework with friends while they stay up late studying for their exams - or not.
also stay up in bed with our phone all night, just on YouTube searching
for funny videos, then you quickly share it with your friends," he
added. "It's easy. You can flip in and out of Kik."
really started to lose its edge over here," said Robinson, who found his
interactions on Facebook less interesting than his real-time chats.
Ontario-based Kik has racked up 40 million users since launching in
2010. Silicon Valley entrants in the race include Whatsapp, funded by
Sequoia Capital, and MessageMe, launched earlier this month by a group
of viral game makers. MessageMe has received seed-stage funding from
True Ventures and First Round Capital, among others, and claimed 1
million downloads in its first week.
Meanwhile, Asian companies
are producing some of the fastest-growing apps in history. Tencent's
WeChat boasts 400 million users - far more than Twitter, by way of
comparison - while LINE and KakaoTalk claim 120 million and 80 million
users, respectively. Both have laid the groundwork to expand into the
The growth in the messaging apps
reflect the dramatic shift in Internet usage in recent years, as Web
visits via desktop computers have stagnated while smartphone ownership
and app downloads have skyrocketed.
Chief Executive Mark
Zuckerberg has publicly called Facebook a "mobile company" to emphasize
the company's priorities. Last year, he splashed $1 billion for
photo-sharing app Instagram, which has remained red hot, while Facebook
also launched its own Messenger app, offering a suite of smartphone
Still, Facebook has also been forced to play
defense. Earlier this year, the company cut off its data integration
with a young startup called Snapchat and then mimicked its feature with a
new messaging tool called Poke, which sends messages that
self-destruct. It has also shut off its integration with messaging apps
like MessageMe and Voxer.
At the same time, Facebook has also
hired graphic artists to draw emoticons and graphics for Messenger that
emulate features of the wildly popular Asian apps like LINE, according
to people with knowledge of the matter.
Dave Morin, an early
Facebook employee who left to found the "private" social network Path in
2010, said he recognized last summer the critical role of messaging
functions in smartphone apps, and quickly began working to incorporate
Since Path released a new version of its app earlier this
month, the number of Path's daily users has risen 15 percent, which
Morin attributed to the new messaging features.
"What's the number
one reason why people have this thing?" said Morin, holding up his
iPhone. "It's to call, to text, to communicate."
Messaging, Morin added, is "the basis for the mobile social network."
established social networks move to incorporate messaging features, the
new-wave messaging apps are looking to grow into social networking
platforms that support a variety of features and enable innovations from
"The tried and true approach for a social
network is first you build a network, then you build apps on your own,
then you open it up to third party developers," said Charles Hudson, a
partner at early stage venture capital firm SoftTech VC.
mirror Facebook's younger days, when its user growth and revenues were
boosted by game publishers like Zynga Inc, which made popular games like
FarmVille for the Facebook platform.
In the South Korean market,
for instance, eight of the top ten highest grossing Android apps are
games built on top of KakaoTalk. Tencent announced in November that it
would introduce a mobile wallet feature enabling payment for goods with
WeChat. And Tencent also makes money in China by using the app's
location data to displaying nearby merchants' deals to potential
If the messaging apps reach a certain scale, they could
form networks that rival Facebook's "social graph," the network of user
connections and activities that enable highly targeted delivery of
content and advertising.
"The folks on your address book are very
different from your Facebook friends and your LinkedIn contacts, and
that's a natural place for a very powerful graph to be created," said
Jim Goetz, a partner at Sequoia Capital.
Ted Livingston, the
25-year old chief executive of Kik, said he developed the capability for
his service to support external features in November, and he plans to
open the platform to outside developers in the near future.
Livingston said Kik and Whatsapp were "in a race to see who's the first to build a platform."
which has been the most widely downloaded communication app for both
iOS and Android in recent months, according to analysis firm App Annie,
has been profitable by selling subscriptions to its service for $1 a
year. Although it has remained mum about its platform plans, the company
has been rumored to be in talks with Asian game publishers about
hosting games, according to news reports in South Korea.
declined to address the reports, saying only that because it relied on a
subscription business model, Whatsapp did not need to sell games or ads
to make money.
Still, he said, the Whatsapp team "spends a lot of time thinking about the developer community."
social networking giants could also swoop in for the upstarts - and
Facebook has demonstrated its appetite for acquisitions.
investors are eyeing a round of potentially lucrative buyouts resembling
the series of deals involving group messaging applications in 2011.
acquired group messaging app Beluga in March of that year, enlisting
its founders to help build its own stand alone app, Messenger, which
launched six months later.
In late 2010, First Round Capital, an
early stage venture capital firm, invested in GroupMe, a group messaging
startup that was sold to Skype just fifteen months after it launched.
Goldman, a First Round partner who has backed MessageMe, said it was
unlikely that the market in the long term could support numerous
independent messaging startups, which by their nature become more
powerful as they grow larger.
"You don't want to be the smallest one when the music stops," he said.
© Thomson Reuters 2013