With so much going on in the tech world in the last few days, it would be next to impossible if you have not heard of the news that Facebook is buying Instagram for a whopping $1 billion. Indeed, for a company that employs 13 people and last only been on for about a year or so, that amount can be enough to send many execs running to their San Diego therapist for a reprieve. On the part of Facebook, the move is so brazen, bold, and surprising that it sent ripples worldwide – from a virtual office London to a corporate HQ in Hong Kong.
So, we ask the obvious question; why did Facebook buy Instagram for $1 billion? Short of saying “only Mark Zuckerberg knows”, here are some insights that helped shape Facebook’s decision to buy the photo-app company:
1. It gives Facebook considerable leverage in the Twitter-sphere. Next to Facebook, Twitter is perhaps the biggest social networking innovation in the 21st century. And where Twitter netizens go, Instagram is sure to follow. A sizable chunk of tweeters – the people who write tweets – share their daily experiences via photos which are done through Instagram. You do not need an engineering degree online or even a Masters in Health Administration to recognize how this is a major niche movement that allows Facebook to put a foot on Twitter’s door.
2. The pure joy of sharing pictures. Even if one does not recognize Facebook’s attempt at capturing a portion of Twitter’s expanding market via Instagram, it cannot be denied that pictures account for a significant amount of the information shared daily via social networks. That alone should provide insight into Facebook’s mentality. Where Yahoo! has Flickr, Facebook will begin using Instagram as an umbrella company. This essentially solves Facebook’s problems in one key niche market and empowers it to make further tweaks by slowly incorporating Instagram into Facebook’s growing captive market.
3. Mobility. We all consider Facebook as one of the most accessible photo-sharing destinations on the web but many who have used their mobile device – from personal to government cell phone releases – have noted how mobile photo-sharing is like doing reps on a pull up bar. Instagram is more than an adequate solution to this problem. It is already tailored for mobile use and can be found as a readily downloadable app in iOS or Android units. The fact that it is now owned by Facebook can only mean that mobility is a prime goal for Zuckerberg and this is where Instagram can give him considerable headway.
Of course, it is hard to argue that Instagram, in an of itself, does not generate any revenue and this begs the question “why pay $1 billion for such a company?” In the real world, nobody buys an SA Property if it does not pay for itself in the long-run. The only viable explanation is that Facebook is confident in Instagram’s ability to expand Facebook’s market so much so that the revenue will take care of itself.
If that is to be believed, then get ready for Facebook’s future move to start putting Instagram in places all over the web. For sure, Facebook will capitalize on the growing popularity of Instagram; what’s next can only be limited by Mark Zuckerberg’s imagination.