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Facebook's acquisition of WhatsApp: Why Indians are not in the big idea space?

Friday, 21 February 2014 - 6:00am IST | Place: Mumbai | Agency: DNA

Facebook has acquired WhatsApp for $19 billion, but where do Indians figure in the IT space now?

IT players maintain Sabeer Bhatia is still the best Indian in the products space. He sold Hotmail for $400 million to Microsoft, way back in January 1998.

There hasn't been many Indians in this space since then, though they have been greatly successful in the services sector and even heading a few IT giants like Microsoft. One Indian, K Ram Shriram, is one of the founding-members of Google.

It's the conservative mindset of Indians, even in the US, that is dissuading them from leaving aside cushy jobs and pursuing their dreams, say IT players in India.

"Indians prefer to be in the services sector and would not want to get into experimenting on products business, which is a high-risk, high-reward proposition," says Prakash Advani, Regional Manager, Asia Pacific, Canonical.

The company provides Ubuntu, an alternative to Windows operating systems.

Ubuntu is being widely used by Indian government departments, the Supreme Court and educational institutions like Indian Institute of Technology.

IT professionals willing to take risks and perhaps capable of developing similar products do not get the kind of venture funding as their US counterparts do, he added.

With the WhatsApp deal, industry observers say IT is now getting integrated across the globe and businesses would target products based on easy tracking of user preferences, according to Ashank Desai, founder and non-executive director, Mastek Ltd.

The deal will increase the number of users and bring them to a common platform, Ashank adds. One of the key reasons for the $19 billion valuation is the high ratio of willing users who pay for software in the US and Europe combined.

Industry observers estimate over 50% of the 450 million WhatsApp users are from the US, Europe and Japan. Non-paying users are primarily from India and China, though users are aplenty.

"Users don't mind paying one dollar for the application, whereas in India, the paying capacity is less,' says Ashank.

This trend also discourages Indian professionals based in their home country to venture into non-paying zones.

'It all depends upon the DNA. If you need to be in the space, you need to have the mindset of taking the risk for high rewards. Even if one is willing to take the risk, the company needs to be incorporated in the US, so that VC funding becomes easy," says Prakash.

Banks, insurance companies are likely to use these tools in application, but the challenge is migrating from B2B (business to business), to B2P (business to people) model, says Ashank Desai.


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