SAN FRANCISCO and BARCELONA -- Facebook (FB) Chief Executive Officer Mark Zuckerberg will take a victory lap at the world's largest mobile technology conference in Barcelona on Monday, after beating out Google (GOOG) in a $19 billion acquisition of free messaging service WhatsApp. But he is facing a new arduous race on the horizon.
Just 18 months after appearing at risk of getting crushed by the swelling mobile wave, the No. 1 social network is riding high. It gets a huge chunk of ad revenue on world-wide users of smartphones and tablets, from virtually nothing several years ago.
Now, Zuckerberg's purchase of WhatsApp -- while raising eyebrows with the hefty price paid for a company that boasts 450 million users but has little revenue -- places Facebook at the heart of smartphone communications.
It's a twist that is sure to have some telecom bosses in Barcelona gritting their teeth. WhatsApp and its fellow messaging apps, including China's WeChat and Israel's Viber, have punched a hole in operators' sales by offering a free alternative to text messages, a $120 billion market for operators. Research group Ovum said telcos lost $32 billion in text revenue last year and will lose $54 billion by 2016.
Zuckerberg and WhatsApp co-founder Jan Koum are likely to cast themselves as partners not foes of the industry in their appearances at Mobile World Congress on Monday.
Zuckerberg's keynote at 17:00 GMT is expected to focus on Facebook's efforts to make wireless Internet access easier and more affordable in developing countries.
Facebook's purchase of WhatsApp is its latest move to transform a platform and company born on the PC into a full-fledged network for a mobile generation. %VIRTUAL-article-sponsoredlinks%Zuckerberg's progress so far on mobile has positioned the company to take advantage of the fast-growing markets. And it has helped boost Facebook's stock roughly 150 percent since July.
But with a new crop of smartphone applications threatening to eat into Facebook's audience, worrying signs of waning interest amongst younger users -- which the WhatsApp acquisition may help address -- and a tech landscape evolving more rapidly than ever before, Facebook can't afford to fall behind again.
That is critical for Facebook as it courts the "next 5 billion" Internet users, many of whom live in places like India and Africa and who are likely to first experience the Internet on a mobile rather than a PC.
"If Facebook is not first in line when those people are firing up their devices, it stands a chance of never connecting with those folks, because there are so many alternatives," said Brian Blau, an analyst at research firm Gartner.
No Sure Thing
To some, Google wields the advantage for now.
Its Android mobile operating system comes pre-installed on roughly 80 percent of the smartphones sold in the world today. That helps ensure new users will see and use its various online services, including search, maps and its Google+ social network.
Once WhatsApp is in Facebook's pocket, there's no guarantee the messaging service -- which famously eschews games, shopping or other popular add-ons to focus on pure messaging -- can remain ahead in a notoriously fickle market.
Rival messaging apps such as Tencent Holding's WeChat and Naver's LINE are popular across Asia and have hundreds of millions of users. They have also expanded to allow users to book taxis, top up phone credit, and take part in flash sales, all on the app.
WhatsApp, which Zuckerberg has promised will remain independent, fits Facebook's recent approach of designing or buying "spinoff" apps for smartphones, such as Instagram or the Paper news app, which has earned positive reviews.
"You see Facebook trying to increase its surface area, with different apps for different things," said Josh Elman, a venture capital firm Greylock Partners. The idea is to give users multiple ways to interact with Facebook throughout the day.
To meet his ambitions, Zuckerberg could use the telecom industry's help. He will make his case to the handset makers and operators gathered in Barcelona that they should work together to make Internet access cheaper and more ubiquitous in the developing world.
Facebook has partnered with over 150 wireless providers over the past four years to offer free or discounted access to the social network, including a deal with Globe Telecom to provide three months of free access to customers in the Philippines.
Not everyone is on board.
Vodafone (VOD) chief executive Vittorio Colao said earlier this month that Facebook had approached him about waiving data charges when customers access the website from their mobiles. But Colao rejected the idea because he didn't see any benefit for his company, which is Europe's largest wireless carrier and also operates in India and across Africa.
14 Money Mistakes to Avoid in 2014
Facebook CEO Riding High for Now After WhatsApp Deal
Interest rates are low, but that's no excuse to accept 0.01 percent interest rates on your savings. Just a little shopping can find you many FDIC-insured savings accounts paying as much as 1 percent in interest, usually with no fees and easy availability to your money through electronic funds transfers. Compared to the near-zero rates that uninsured money-market mutual funds and other alternatives pay, high-interest savings accounts are a much safer way to save.
Banks still try to get customers to pay more for less, with one recent threat to charge fees for basic deposit accounts if the Federal Reserve cuts interest rates further. But many online banks not only offer fee-free options on their checking and savings accounts but also pay interest, and many have extensive fee-free ATM networks or reimbursement arrangements. If your bank follows through on threats to raise fees, taking your business elsewhere is your best move.
Bankrate reports that the average credit card charges around 16 percent in interest. That's a guaranteed money-maker for the banks that issue cards, but a big loser for those who carry balances on their cards. With many cards offering promotional interest rates as low as 0 percent, using them to get rid of high-interest cards is a no-brainer move and can help you pay your debt down faster.
Mistakes on your credit history can keep you from getting a loan that you want to buy your next home or car, but they can also have consequences you'd never imagine. Increasingly, insurance companies, apartment rental agents, and even prospective employers order copies of your credit report to see if you're financially responsible. Be sure to take advantage of your free credit check at the government's annualcreditreport.com website to make sure the three big credit-rating agencies have everything right before mistakes come back to bite you.
Payday loans have gotten more tightly regulated recently, but banks and other financial institutions still offer ways to let you get quicker access at your cash -- for a hefty fee. Resorting to short-term money fixes can land you in even more problematic situations down the road, because those solutions often create debt spirals from which it's hard to emerge unscathed. Set up an emergency fund instead and be prepared in advance for the money woes that life throws your way.
Interest rates have risen during the last half of 2013, with a typical 30-year mortgage carrying a 4.5 percent interest rate. But many homeowners still carry higher-interest mortgages from before the financial crisis. Now that home prices have risen, you might be able to refinance for the first time, and many homeowners have used lower rates to cut hundreds from their mortgage payment or shift to a shorter-term 15-year mortgage to pay off their debt faster.
Too many people never update their insurance coverage to deal with changes in their coverage needs, whether it comes from changes in family status for life insurance, health conditions for health-care or long-term care insurance, or even what types of property you own for homeowners' insurance. Don't wait for disaster to strike; check with your insurer or agent to see if your current coverage meets your needs.
In the past, investors had to pay hundreds or even thousands of dollars just to make a simple stock purchase. Now, though, the rise of discount brokers, low-fee index funds and exchange-traded funds, and freely available investment news and advice have made it silly to spend large amounts to get access to the financial markets. If you're still paying your broker too much to invest, look into alternatives that can help you avoid cutting serious money out of your retirement nest egg.
Everyone likes a tax break, and one of the best ones for you to use involves making contributions to a tax-favored retirement account. By putting money in an IRA or 401(k), you can reduce your current taxable income and save on your taxes while also preparing for the future. With 401(k)s, your employer might even chip in a bit on your behalf. Even when times are tough, finding even small amounts to save can put time on your side and make a big difference down the road.
Many investors found out the hard way this year that bonds aren't as safe as they thought, with some major bond funds posting double-digit percentage losses in 2013. Despite those losses, bonds still carry substantial risk in 2014, with many calling for imminent interest-rate hikes that would erode their value further. Even now, bond rates are so low that they don't compensate you much for their risk.
In contrast to bonds, stocks have soared in 2013. That has some investors finally piling into the market for the first time since 2008 and 2009, while others remain shell-shocked from the massive losses they incurred back then during the financial crisis. Even with the Dow Jones Industrials (^DJI) and other major market benchmarks near all-time record highs, it makes sense to have some stock exposure in your portfolio. Just don't go overboard in the false belief that gains of 20 percent and 30 percent will happen every year.
If you pay full price for just about anything these days, you're paying too much. The rise of deep-discount stores has led to falling prices at stores and shopping malls. Moreover, online tools like coupon sites, daily-deal offers, discounted gift cards, and cash-back credit-card deals can cut your costs as well. With all these tools, you won't find many situations in which you have no chance of getting a bargain on the items you want.
In the past, many young adults focused on getting into as strong a college as they could, figuring that their degree would pay them enough to make up for the costs they incurred. With college graduates facing a more challenging job environment than ever, smart students are thinking about college costs before they make a decision on a school. By maximizing financial aid and looking at lower-tuition schools with nearly as strong educational quality, you can avoid creating a big debt hole that you'll struggle with for years into the future.
If you don't have a will, a power of attorney for financial and health-care matters, and an advance directive to tell medical professionals whether you want certain life-preserving measures taken if something happens to you, then you're putting your family at risk. Many people don't have even these basic estate-planning documents, but getting them in place is easier and less expensive than most believe. Get your affairs taken care of in 2014 and save your loved ones some big future hassles.
Resolving to be more financially astute and to avoid common mistakes will help you get your finances in order more quickly. These tips should give you more money to help you meet all your financial goals.