Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Google Inc (GOOG), Apple Inc. (AAPL): Where’s The Next War?

A new battle has erupted in the mobile world of smartphones and tablets – the battle of the instant messaging apps.

Research firm Informa recently estimated that across the world, 19.1 billion mobile instant messages were sent daily in 2012, compared to 17.6 billion traditional SMS messages. This indicates that old SMS functions are losing their technological relevance as users with Internet data plans opt to send free messages, instead of signing up for restrictive SMS texting plans. Informa projects that these chat app messages will rise to 41 billion delivered daily by the end of 2013, compared to 19.5 billion SMS messages.


This indicates that chat apps such as WhatsApp, Skype, Viber, Tencent‘s WeChat and LINE will eventually replace SMS text messaging, and with the addition of VoIP (voice over IP) functions, they are also replacing traditional phone calls as network speeds improve. This paradigm shift not only impacts telecom providers, but also changes the game for major tech companies such as Facebook Inc (NASDAQ:FB), Google Inc (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT).

The major players

Let’s first meet and compare the major players in mobile chat messaging.



User Base


Annual Revenue

Strongest Region


WhatsApp Inc.

200 million


$100 million (rumored)




280 million


$800 million (2011)



Viber Media

200 million






400 million





Naver Japan/NHN

120 million


$59 million (1Q 2013)

Japan/ Southeast Asia


Kakao Inc.

80 million


$45 million (2012)

South Korea

Facebook Messenger


60 million (rumored)




Source: TechCrunch

All of these apps, except for WhatsApp and Facebook Inc (NASDAQ:FB) Messenger, offer voice calls. WhatsApp is notably limited to text chats with photo and video sharing. Facebook Messenger, which released its app in response to the flood of chat apps, only offers voice calls in select markets.

Asian ambitions

The Asian companies – WeChat, LINE and KakaoTalk – notably offer more features than their Western counterparts.

All three Asian apps use emoji (object emoticons) and stickers (large collectable pictures) extensively. In addition, they also develop mobile games that are directly integrated into the chat platforms. LINE has even launched its own line of cartoon characters with their own show and toys, which are popular throughout Asia. WeChat also announced that it was releasing a mobile wallet, similar to eBay’s PayPal, later this year.

Yet these ambitious companies are only the tip of the iceberg. There are plenty more chat apps out there and being developed by smaller companies, looking to cash in on the growing market. What does this budding market mean for the tech industry?

The death of traditional email

With the arrival of Facebook, traditional email became increasingly outdated. The whole act of sending emails was cumbersome in comparison to the streamlined nature of Facebook messages, which added the ability to attach files to messages. It felt even more unnecessary on a mobile platform, when traditional email messages would be delivered along with social networking, SMS and chat app messages.

In other words, traditional back-and-forth emails were being displaced by “mobile conversations.” This is a fact that Google Inc (NASDAQ:GOOG) attempted to address with its newest revamp of Gmail, which made its email experience more closely resemble a Facebook conversation. Yet that change only addresses cosmetic problems, and not fundamental ones.

In five years, it’s doubtful that people will really need multiple email accounts, SMS messaging, a Facebook account and chat apps all running on a single smartphone. That’s why I believe that traditional email will become increasingly irrelevant, absorbed by social networking or conversational chat apps.

Impact on other companies

Facebook and Google Inc (NASDAQ:GOOG), which are both intent on entangling Internet users in their large social webs, need to realize that these chat apps represent a significant threat in social media. WeChat, China’s most popular chat app, already has 400 million users, more than Twitter’s 300 million. What’s more, Asian chat apps also have timeline features within their apps for users to share status updates, photos and videos. When combined with their integrated mobile games that are flooding the market, the threat becomes clear – mobile rivals to Facebook that were built from the ground up to be used on smartphones and tablets.

In response to these companies, Facebook released Facebook Home, the Android home screen launcher replacement that attempts to bury other apps beneath its Facebook skin. By making Facebook chat the only chat option within Facebook Home, it attempts to block out other chat apps. Chat apps also undermine Facebook’s authority in another way – it builds an instant social network from users’ phone books, rather than a slow system of email searches and friend requests. This has made some apps, such as Kik Messenger, more popular with teenagers than Facebook or Twitter.

Google Inc (NASDAQ:GOOG) is also scrambling to create a unified messaging product, codenamed Babel. Babel will work across phones, tablets and desktops, and offer integration with Chrome and Google+ hangouts. Google’s extensive desktop and Android ecosystems will give it a major advantage on this front. With a single Google login, Google could draw all of its users together onto a single chat app platform. What’s more, Google has $50 billion in cash, compared to Facebook’s $9.5 billion, which means that it could simply start buying up independent competitors such as WhatsApp.

Meanwhile, Apple Inc. (NASDAQ:AAPL)’s iMessage, which was introduced in iOS 5, is a cross-platform chat app that works across its desktop, tablet and smartphone platforms. However, unlike Facebook or Google Inc (NASDAQ:GOOG), Apple doesn’t have the grand ambition to become a sprawling social network ecosystem that dominates the entire Internet. By comparison, iMessage merely seems like a way for iOS users to keep in touch with each other, extending the cult appeal of Apple Inc. (NASDAQ:AAPL)’s products.

Microsoft Corporation (NASDAQ:MSFT)’s Skype, while considered one of the most widely used chat apps in the world, could become a liability for its parent company. Although Skype’s free Internet-to-Internet voice chats are extremely popular, it generates the majority of its revenue from paid services, such as Internet-to-landline calls. The popularity of free VoIP chat apps, combined with the new 4G LTE networks, could make Skype look outdated by comparison. Skype also lacks many of the more advanced features of its Asian competitors.

The Foolish Future

Although traditional SMS and email aren’t likely to disappear anytime soon, mobile chat apps are a hot market that should be watched carefully. While the revenue growth of the major players hasn’t been impressive, their massive user bases are.

In March, research firm IDC forecast that smartphone vendors will ship 918.6 million smartphones in 2013, a number which will climb to 1.5 billion by 2017. Over that time, higher mobile Internet speeds will make HD video chats and crystal clear VoIP calls via chat apps a reality. When that happens, we might not even need phone numbers anymore, since all text and voice chats would be made directly via smartphone apps.

While the future looks bright for chat app companies and smartphone vendors, Internet giants Facebook, Google and Microsoft need to tread carefully. Meanwhile, telecom companies, which shoulder the high costs of building massive data networks, should be downright terrified.

The article Let the Mobile Chat Wars Begin! originally appeared on and is written by Leo Sun.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.