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Web-free app goes viral, but what's next for FireChat?

FireChat: Surprised by popularity in Hong Kong

Pro-democracy protests in Hong Kong pushed FireChat into the spotlight on Sunday, when the messaging app added 100,000 users in 24 hours, and analysts say this may only be the beginning.

FireChat users can exchange text and images using Bluetooth or peer-to-peer wifi. It does not require an internet connection, but users must be within 70 meters of one another to exchange messages. The free app is popular at concerts and festivals and in countries with poor or restricted web connectivity.

"[FireChat has] visualized user cases that social messaging giants like WhatsApp, WeChat and LINE have not, like the lack of an internet connection, either enforced or due to unreliable connectivity," Shiv Putcha, associate director with IDC's Asia/Pacific consumer mobility and social consumer research team, told CNBC.

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The app, created by Open Garden, went viral in Hong Kong over the weekend amid fears that the internet could be shut down, but which did not come to fruition, and cellular network congestion.

FireChat was created for entertainment purposes but "we quickly realized that it could also be used in this kind of situation," Micha Benoliel, Open Garden co-founder & CEO, told CNBC on Thursday.

"The mission of this company has always been built to freedom of speech and access to knowledge," he said.

Student protesters hold their cell phone lights chanting pro democracy slogans during evening speeches at the protest site on October 1, 2014 in Hong Kong, Hong Kong.
Paula Bronstein I Getty Images

Potential user base

FireChat could gain traction in emerging markets where internet connectivity is an issue, Putcha said: "The next billion consumers in emerging markets will love the FireChat features."

Ten percent of FireChat's current user base is in India, where poor connectivity is common, Quartz reported this week.

Censorship and internet regulations could also increase FireChat's user base. The app gained popularity in Iraq and Iran amid internet blackouts earlier this year. In June, the app was downloaded 40,000 times in Iraq.

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Political unrest is another potential source of new users. In addition to the increase in interest in Hong Kong, student protests in Taiwan, known as the 'Sunflower Movement', sparked a surged of downloads in March.

Investment case

FireChat has a number of features in addition to its ability to function without an internet connection of mobile coverage that make it an attractive investment, Ryan Huang, market strategist at IG, told CNBC.

"It has rising brand equity from the positive publicity [surrounding Hong Kong] and the growing number of headlines [is] positioning it as the de facto go-to app," he said.

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FireChat is building the critical mass it needs for its peer-to-peer model to take off, Huang said.

"Potential interest could come from the advertising sector, which is able to monetize the app by selling location-based ads and promotions," he said. "Companies with social network businesses could also possibly benefit from integrating FireChat with their own products."

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"I think it will be very tough for FireChat to scale, especially now that it has entered the limelight following the Hong Kong protests," said IDC's Putcha.

"I expect the 'mesh-networking' concept underlying FireChat to be emulated by the social messaging majors, who have tremendous global scale already and are well funded," he said. "FireChat could become an acquisition target."