Recently is was announced that facebook would acquire instagram for $1 billion. It raised a few eyebrows, not least because instagram seemed to have no real revenue.
One point made was that at that time instagram had 13 employees, while facebook had 4000 employees. It was wondered if facebook could have saved a lot of money by building something similar themselves, especially with easy access to their audience.
The purchase is also a sign that facebook is taking the mobile web very seriously.
The extraordinary statistic that ’10% of pictures ever taken were taken last year’ can undoubtedly be partly attributed to the rise of Facebook, so in that sense the acquisition is a good match. It also displays that there is room for growth in the digital photos market.
Facebook would have also been concerned with instagram’s incredible speed of growth, and nipping that in the bud has strengthened facebook’s castle.
The question of how shrewd the acquisition was will boil down to whether or not instagram, as part of Facebook, can grow to be worth more than $1 billion. The answer is ‘probably’. And the extraordinary figure of ‘$1 billion’ did gain the story a fair few dollars worth of extra press.
The acquisition was also interesting from a tech start up point of view in that it has given a bench mark for acquisitions of startups, of which there hadn’t been for a while.
It’s also bound to turbo charge the motivation of app developers around the world, which can’t be a bad thing.