Google, WhatsApp, Facebook and Becoming Microsoft

There is lots to be said or inferred from the $19B purchase of WhatsApp by Facebook last week.  I particularly like Robert Reich's point about "this being everything that is wrong with this economy". Interesting perspective from a smart guy.

But I want to make another point, a related one perhaps, but it speaks to the shape of things to come.  I saw a tweet today from Donal Daly of The TAS Group that said "..WhatsApp and other mobile-messaging services have cost phone carriers an estimated $32.5B in lost revenue from texting fees.". As always, Donal's insights gave me pause to think about a few things.  Firstly, I believe technology evolution is a little like what they say about history - it repeats itself.  In a business sense, few companies were as revered in the marketplace for what they were able to accomplish as much as Microsoft was when they owned the OS. The hardware folks fought to the death with slim margins as Redmond chugged along.  I've always felt that was also Google's quiet corporate goal - own the middleware to own the customer.  But if we're in a new era now where the phone is now the computer, and we're all connected, would you rather be the Telco, the hardware provider or the OS ?

Sure the Telco gets the glory sometimes, but they have the network infrastructure costs too and the share battles with one another.  They're desperately trying to upgrade to maximize ARPU (average revenue per unit) while we all joyfully play Angry Birds and trade tweets, and Snapchats.   The handset manufacturers crowd each other in low cost production centers to be phone flavour of the month, but that is fleeting at best. The crown isn't worn for very long in that arena.  The OS folks on the other hand - they seem to have an interesting role - although to date it's been challenging to directly monetize.  Google's android OS is the primary player, but they don't make trainloads of revenue from it.

So what's changed ?  What if the joy to control and revenues with a completely scaleable model was to steal the Telco's customer attention (and funds) and do so in a hardware agnostic way ?  What if the app is the new road to dominance ?  

I've spoken here before about Amazon's cleverness in making consumption devices, and Apple's control of the OS as a means of fuelling via iTunes and the AppStore.  What are the chances that the shortcut to the same intended outcome (for non integrated-platform owners) is the seizure of key applications..?  If Facebook can't have their own OS, then they will try to own the means to interrelate via these platforms. It's both a relevance and business model extension.

What does this mean ?  It means Twitter just quintupled in value as the other big players in this space won't be blind to this move, and the feeding frenzy is about to commence. Have network of users - will sell.