Facebook on Wednesday acquired WhatsApp, a rapidly growing cross-platform mobile messaging company. The deal was sealed for approximately $19 billion in cash as well as stocks. This is the third acquisition by the company in two months.
In the beginning of January this year, Facebook acquired Little Eye Labs, a Bangalore-based company, which works in performance analysis and monitoring tools space.
With the exception of Little Eye Labs, not many Indian start-ups have been able to impress the likes of Google, Facebook and Twitter. The main reason, say experts, is the lack of motivation on the part of start-ups to create products that are globally appealing.
"In core, we are still an IT services nation. It's only in the last 3-4 years we are seeing some momentum in the IT product space with start-ups beginning to explore this area," says Manas Gajare, founder, Zabuza, a mobile app and game development company.
Also, because of the sheer size of the Indian consumer market, Indian start-ups develop few things for markets in the US and the UK. "First of all, there are only a few start-ups which develop products for consumers in India. And the ones who are in this space, do it for Indian consumers and not for the US consumers, mainly because India is huge to tap," says Sharad Sharma from iSPIRT, a software product think-tank.
Shashikiran, co-founder Unstoppable.in, says that community-driven businesses are the ones which are generating interest in terms of acquisitions. "Instagram, Skype, WhatsApp all got acquired because their business involved the community. Indian start-ups have now slowly started doing it, but there is still a long way to go," he says.
Both Sharma and Shashikiran feel that companies like Zomato, Zoho, Instamojo and Mygola have a global appeal and setting up an example for other start-ups in India. Even RHL Vision, incubated at the start-up village in Kochi, has a global appeal.
However, Sharma feels it is still a long way to go before Indian start-ups make an impact on the global map. Sharma says he does not see much chance of Indian products being successful globally, as there is a huge difference between investors in India and the West.
"If you look at WhatsApp, it's not really a revenue-generating model. However, investors are still ready to invest. The mindset of investors is very different there. Here, it will not be easy for VCs to invest, if the product is not a revenue-generating model," he says.
"A product is successful when there is huge customer adoption and repeat use. There are many companies like WhatsApp. However, what makes WhatsApp stand out is its seamless and reliable service," says Shameel Abdulla from Jiffstore.
Even Sangeeta Devni, who mentors start-ups at Nasscom Warehouse in Bangalore, feels there are very few start-ups in the consumer space. She is confident that, in coming years, Indian companies will make their presence felt in the global arena. She cites the examples of TookiTaaki and Bookpad as two start-ups which have the potential to make it big globally.
Earlier this year, Deloitte, in its India 2014 technology, media and telecommunications predictions, said Mobile Instant Messaging (MIM) and SMSes are likely to be regarded as direct competitors.
The report predicts that, in 2014, instant messaging services on mobile phones (MIM) will carry more than twice the volume (50 billion versus 21 billion per day) of messages sent via short messaging service (SMS).
"The Facebook- Whatsapp deal highlights the increasing importance of the messaging space and the role it will play in mobile-internet going forward. We're seeing India following a similar growth trajectory especially in the messaging space; with the proliferation of cheaper smartphones and data plans. As a result, we're seeing tremendous growth with hike especially amongst the youth. We've tripled our user base in just 9 months to 15M users and we're dedicated to build a world class service for this mobile-first market," said Kavin Mittal, Creator, Hike, India's free messaging app with a base of 15 million users.