The arrival of a brand new vector of e-commerce

The $19 billion price tag is a perfect microcosm to describe how technology is aiding ever-expanding wealth inequality

February 24, 2014 02:20 am | Updated November 17, 2021 02:13 am IST

This Wednesday, Feb. 19, 2014 photo shows the WhatsApp and Facebook app icons on an iPhone in New York. On Wednesday the world's biggest social networking company, Facebook, announced it is buying mobile messaging service WhatsApp for up to $19 billion in cash and stock. (AP Photo/Patrick Sison)

This Wednesday, Feb. 19, 2014 photo shows the WhatsApp and Facebook app icons on an iPhone in New York. On Wednesday the world's biggest social networking company, Facebook, announced it is buying mobile messaging service WhatsApp for up to $19 billion in cash and stock. (AP Photo/Patrick Sison)

Nineteen billion dollars. A figure, high as it is, that has left market analysts gasping, investors beaming, and entrepreneurs hopeful. When news of Facebook’s acquisition of WhatsApp broke, the comparisons and judgments were, perhaps, inevitable.

It’s a tech bubble, cried many. Others quoted the now infamous, and clichéd, Dutch tulip bubble. And, a few tech pundits pointed out that $19 billion was a little higher than the GDP of a hundred different countries.

Even if one chooses to ignore the fact that a lion’s share of the money is being paid in Facebook stock, the deal illustrates how the consumer technology industry has very little to do with the rest of the corporate world.

Put simply, it’s becoming harder and harder to guess which technology company is going to bite the bullet next. It isn’t quite a game of Russian roulette yet — there are broad signs, of course —but with the kind of cash floating around in the technology space, it might as well be.

Indiscernible factor

Firstly, the framework through which technology businesses operate is becoming an indiscernible factor. Before the advent of the Internet, the humble telephone was the WhatsApp of the time. It allowed real-time communication at a much greater rate of efficiency and less hassle, which lead to telecom companies ruling the roost.

This started changing with the PC revolution and the invention of the Internet — which allowed real-time communication over geographical boundaries for a fraction of the price of the telephone. Telecom companies gradually become dumb, utility beasts, and were replaced (in the pecking order) by IBM, HP, Dell, Microsoft and Google.

The lines further blurred, when computers jumped from the desk to the pocket. IBM, HP and Dell were replaced by Apple and Samsung —which took the Internet and Web everywhere. But even with the initial coming of the smartphone, communication was passive, at best. After sending an e-mail or a Facebook inbox message, for instance, one had to wait for the other party to sign into the service, check notifications and so on.

Today’s telephone is, therefore, the messaging service — be it WhatsApp, Line, Hike, WeChat — where the communication is constant, never-ending, and strong. A messaging application consumes the maximum attention of the customer — and, therefore, allows for a brand new vector of commerce itself.

The act of buying or purchasing an item is usually a purposeful and burdensome task. One has to get into a car, drive to the store, spend time, and engage in idle chat with the cashier and so on. Even e-commerce doesn’t solve this — the store is replaced by the desktop PC and the idle chat is replaced by fumbling for credit card details. With a messaging application and a smartphone, the divisions between the channels of communication (which includes a friend’s recommendation) and purchasing become quite small indeed.

Consider, for instance, a futuristic example. Person A sends Person B a restaurant recommendation through a smartphone, through a service like Yelp, and via a messaging application. Person B then, of course, doesn’t receive a URL string full of numbers and letters — he gets an interactive mini-version of the restaurant’s website. Person B can then choose to peruse through the menu, make a booking, choose what kind of table he wants and also pay for the meal in advance. Person B then sends his booking order as a party invitation to six of his closest friends.

What type of applications was Person B using? An app? A widget? Some new software? It doesn’t quite matter, because the whole experience is seamless, with the power of physical retail and e-commerce being greatly magnified as purchasing and communication become one and the same.

Framework of the future

This is, in essence, the framework of the future — a blank canvass that merges communication and commerce and that will be powered, in some small way, by messaging applications like WhatsApp and Line.

Sure, the $19 billion price tag is a perfect microcosm to describe how technology is aiding ever-expanding wealth inequality. Today, companies that are two years old and have only 50 employees can be worth $19 billion. A few decades ago, it would have taken a company over 30 years to do the same — and, in the process, give jobs to thousands of people, pay suppliers, provide pensions and the like.

But $19 billion isn’t overly unreasonable if it’s a shot at the blank canvas of the future. While PCs sparked a wave of business and productivity, they now sit at the bottom of the pyramid. Smartphones are the current platform — and it is on top of this that social commerce will be built. Every technology company will have to understand how to tap into the topmost layer — if only to avoid the fall to the inevitable bottom.

anuj.s@thehindu.co.in

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