Facebook is in talks to buy drone manufacturer Titan Aerospace. A fleet of 11,000 drones can provide WhatsApp mobile messaging and Facebook access to millions of new users in developing countries.
The drone fleet and Facebook’s dramatic purchase of WhatsApp are just the latest moves in a much larger battle between the West and Asia for the future of digital innovation, social networking, mobile communications and tech sector dominance.
Asian tech giants are directly challenging their Western counterparts in the battle to be the top messaging and social network brand for 5.6 billion global smartphone owners by the end of the decade.
Who wins has major implications for the future of the whole mobile sector, particularly communications, entertainment, content distribution, advertising and online to offline services and commerce.
American companies have largely dominated the commercial Internet since the mid-1990s. They rely on their large domestic market to scale up, before expanding globally to crush local competitors.
Google now dominates search, Facebook is the leading social network, while Twitter is an international force in real-time communications and Amazon likewise in online retail.
However, the same strategy of a domestic build-up to create a springboard for foreign growth has been adopted by major Asian tech companies for their mobile messaging apps.
NASDAQ-listed Chinese firm Tencent has the WeChat app, which has 600 million registered users: 450 million in China and 150 million abroad.
The KakaoTalk app, backed by wealthy South Korean game industry veterans and Tencent, has been downloaded to 93% of smartphones in its home country. It forecasts $200 million revenue for 2013.
Line is the dominant messaging app in Japan, though owned by Korea’s Naver Corporation. Originally NHN Japan, it was renamed Line specifically to create a brand with global appeal.
The messaging apps are next-generation, mobile-native communications services, social networks and digital platforms.
They offer smartphone owners free instant messaging, via WiFi Internet or mobile data, as an alternative to paid-for SMS messaging (texting).
To this highly attractive consumer proposition, the messaging companies are adding further communications features (such as Skype-like VOIP voice and video calls), social networking (profiles and timelines), entertainment (games and music), and online-to-offline services, whereby users can access their bank account, book a taxi or buy cinema tickets.
The apps’ parent companies are far from shy about their global ambitions.
In November 2013, when Line had gained 300 million registered users, CEO Akira Morikawa said, “We aim for 500 million users within 2014 and to develop Line into the world's top communication service.”
The widespread adoption of the apps and their international expansion put them on a collision course with Facebook, Twitter and VC-backed messaging start-up companies. Twitter even felt obliged to warn prospective investors about the threat in its IPO filing.
[Twitter faces] “increased competition from local websites, mobile applications and services that provide real-time communications, such as Line in Japan and Kakao in South Korea, which have expanded and may continue to expand their geographic footprint… If we fail to expand effectively in international markets, our revenue and our business will be harmed.”
However, Twitter did not anticipate that one of them would challenge Twitter’s core Social TV business, of providing advertising services related to television content and users tweeting about TV shows. WeChat recently entered Social TV via a product integration deal to show the app in the South African version of top reality format Big Brother.
Currently, the main battlegrounds between the Western social networks and their Asian rivals are emerging markets in Asia (India and southeast Asian nations such as Indonesia and Thailand), Spain as a European entry point, and the larger Latin American nations.
The Asian apps typically launch into countries via high-profile television ad campaigns. WeChat’s $200 million marketing spend for 2013 funded a TV commercial with soccer star Lionel Messi that ran in 15 markets, including Spain and his home nation of Argentina.
Facebook and Twitter are both trying to respond as rapidly as possible to this fast-developing threat to their own global strategies.
Facebook was already adding new functionality to its standalone Messenger app when Mark Zuckerberg decided it was worth spending a massive $19bn to buy leading independent messaging provider WhatsApp and its 430 million global monthly active users.
This bought Facebook a highly successful messaging app. Yet the deal was also in part a defensive move, as it prevented an Asian rival taking over WhatsApp and closing Facebook out of markets where WhatsApp is well established. (It has since emerged that Tencent was talking to WhatsApp, too.) The popularity of WhatsApp in North America and Europe also makes it harder for the Asians to make headway there.
Twitter has responded to the rise of messaging apps by making the direct messaging feature much more visible and accessible in the its mobile app interface.
The Asian companies are meanwhile further positioning for the smartphone future by investing in or even buying up Western app companies.
Japanese online retailer Rakuten recently bought Cyprus-based messaging company Viber for $900 million, to launch a mobile games service and integrate digital commerce in the app. Rakuten had already taken a $50 million stake in the image-based social network Pinterest, while Tencent has invested in image-sharing app Snapchat, which Facebook previously failed to buy outright.
Whichever companies finally come out on top, the rest of the decade will see the tech balance of power hotly contested between Asia and the West.
Futurescape's Mobile Messaging strategy report provides unparalleled coverage of this dynamic and highly competitive market.
151 pages of analysis, with 131 tables and figures for instant reference on key mobile messaging research and data, together with in-depth company profiles of messaging companies, including KakaoTalk, Kik, Laiwang, Line, Nimbuzz, Tango, Viber, WeChat, WhatsApp.