A Billion Dollar Deal

This week saw Facebook buy photo sharing app Instagram for $1 billion.

The success of Instagram relies on its simplicity. It set out to change and improve the way the world communicates and shares. All you have to do is take a photo, apply one of the 17 filters and upload it to any social media site. 30 million people use the app and it’s so popular that last week when an Android version of the app was launched it was downloaded 1 million times in just 12 hours! As an Android user myself I was one of these eager downloaders; I think it’s a great way to make mobile photography more interesting.

Instagram was born only 2 years ago, taking 8 weeks to build and launch. Co-founders Kevin Systrom and Mike Krieger started the company to make sharing photos instant, with the feel of an old Polaroid camera style.

This is the first time Facebook have acquired a company or product with so many users, Mark Zuckerberg said it will probably be the last. So why Instagram? Is Facebook just wanting to keep Google + at bay; making sure they keep the lead in the social media industry?

The deal shows similarities to when Google acquired You Tube. At the time You Tube users were worried by the takeover, thinking Google would change everything. However, that was not the case and the two were kept separate, allowing You Tube to keep its key features but also improve as time went along. You Tube, like Instagram was a not – for -profit organisation but it added something Google wanted to its repertoire –video. Instagram is adding something that Facebook wants – mobile technology.

Smartphones are the future of computing and Facebook knows this. It was created for desktop and it’s no secret that it’s been a bumpy ride over to mobile computing. Instagram offers Facebook another way to be the top app; photo sharing. Photos are Facebook’s key component, its crucial selling point; Instagram will be able to enhance this user experience. User photos are so important to Facebook’s web site, it was estimated in February that users upload 250 million photos a day to the network.

In statements released by both companies this week, they alluded to the fact that they will stay separate and make the app even better. This again relates back to the Google – You Tube acquisition. The two companies still feel separate and this appears to have worked well for both, although it’s unclear if Google made their money back. So maybe it’s not just about the money but the talent too. Facebook acquires 13 people in this deal as well as the ready-made technology.

So with this purely mobile application it will be interesting to see what Facebook’s next move is. They now have lots of advertising space and with 30 million users, I think Facebook have made a worthwhile investment. Only time will tell to see how it can be improved and further integrated into Facebook itself without damaging Instagram’s stellar reputation and fan base.