One of the biggest tech stories of the week is the explosive growth of Telegram, the messaging app that closely resembles WhatsApp. Following the Facebook acquisition of WhatsApp, the formerly obscure Telegram has started garnering millions of downloads a day, hitting 5 M downloads last Sunday alone. This is sweet revenge for Pavel Durov. Facebook has outmaneuvered the Russian social networking site called VKontakte created by Durov, though VK still had more than 200 M accounts at the beginning of 2014. Now the Durov-backed Telegram, which launched just last October, is hitting the big time in the global application market… thanks to the backlash against the Facebook-WhatsApp merger.
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When Telegram launched last autumn, it was widely viewed as being much too little, too late. WhatsApp had already topped 400 M monthly active users. Asian giants like LINE and WeChat had also amassed hundreds of millions. What could a late entrant do? A lot – particularly because Telegram was modeled very, very closely after WhatsApp. Unlike the gaudy bazaars of LINE and KakaoTalk, Telegram had the same clean, austere vibe as WhatsApp. Since Telegram claimed to possess far stronger encryption protection than WhatsApp, it was a perfect replacement app in case consumers found reason to dump their original messaging app.
And after Facebook bought WhatsApp, millions of consumers are suddenly motivated to switch out. The new Distimo survey offers some clues to what is happening. In America, Telegram downloads have grown by 20 times since the acquisition; but in Germany, the growth has been 96-fold – and in Netherlands, stunning 147-fold. Suggestively, the three biggest Telegram countries are now European, though only one was before WhatsApp was acquired. According to App Annie, Telegram has soared to Number 1 app in five biggest Latin American countries, as well as four of Europe’s biggest markets.
Becoming the Number 1 app in any country is a remarkable feat for any messaging app. Download charts tend to be dominated by games and even hugely popular new fads like Snapchat rarely hit Top 3 for longer than a few days. Yet Telegram is now the Number 1 app in 46 countries, including Germany, France, Spain, Italy, Brazil, Mexico and Argentina. What I find suggestive here is that many of the biggest Telegram markets today are countries where WhatsApp was remarkably successful around 2011 – 2012, such as Netherlands and Spain. These were the original anchors for WhatsApp success – and yet these same markets triggered the massive Telegram download frenzy last weekend.
The most likely explanation is that consumers are switching from WhatsApp to Telegram precisely because they oppose the Facebook acquisition strongly. A portion of WhatsApp users have always had strong feelings about the bare, stripped-down design of the app. The vocal opposition against ads and consumer tracking by WhatsApp founders resonated with the fans of the app. The Facebook sale has been seen as the ultimate betrayal by many of the strongest supporters of the app. Of course, Facebook is pledging to maintain the app’s integrity and avoid drastic UX changes. Yet the mere ownership by one of the most aggressive marketers in the social networking space has been enough to alienate enough people to funnel millions of new users to Telegram every day.
How long will this phenomenon last? The thing about these switchers is that they all try to pull 5-50 other users with them. I have talked to several Spanish and Argentine app users who have been pressured to download Telegram due to the pressure from a couple of vocal, passionate people in their social network. Because Telegram is designed to resemble WhatsApp so closely, the transition is relatively painless. We already know messaging app users are a fickle bunch. The massive success of LINE in Spain during the winter of 2012/2013 was a textbook example of how easily people can be persuaded to join new messaging circle even if they already are using one or two similar apps. I think it’s quite possible that the American executives of Facebook have profoundly miscalculated the deep suspicion and even animosity that hundreds of millions of people have towards the service, particularly in Europe and Latin America. It is worth noting that the only major European market where Telegram is not the Number 1 app today is the United Kingdom – an island of Facebook-friendliness compared to France or Spain.
The Telegram surge may continue for weeks, if not months – and even at lower levels of switching, the app could easily hit 100 M users in a month. This is a demonstration of both the flexibility of the messaging market and the vulnerability of WhatsApp. Paying $19 B for 450 M customers may make sense. But what if a substantial portion of those 450 M customers are deeply hostile towards the buyer’s brand and values? Did Facebook seriously consider this issue?
Perhaps it is not too late for smaller, newer rivals to carve out meaningful chunks of the global pie. And now that Viber and WhatsApp are gone, the value of 100 M user apps like BBM and Kik is suddenly spiking. Last night, Bloomberg speculated that Softbank might be interested in buying a chunk of LINE, driving the share price of Naver up 8%. BlackBerry share price has spiked from $9.10 to $10.70 since the Telegram surge exposed the fluidity of the messaging market. BlackBerry’s messaging app, BBM, has retained strong traction in Africa, Middle East, LatAm, Indonesia, India, UK and Canada. This patchwork of countries may well be enough to enable it to hit 200 M registered users by the end of 2014. The recent addition of Voice functionality seems to have helped buoy its download performance in emerging markets.
The number of mid-sized messaging apps that are plausible purchase candidates is shrinking – and giants from Softbank to Alibaba to Google are waking up to the fact that they may need a global messaging app as a part of their product portfolio. The distribution power of these networks for both digital content and etailing is only now starting to emerge.
We may face a period of awe-inspiring turmoil in the mobile messaging market in 2014 as global giant corporations play catch-up.
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