Facebook announced today that it will acquire photo-sharing app Instagram, for a reported $1 billion. The big question is - why?
The way I see it, Facebook wants three things out of Instagram: 1) its potential to become the leader in photo-sharing, 2) an injection of "cool" that's coming from the outside, and 3) a still-growing user base of young, trend-influencing people.
1. Photo Leader
Despite the sheer number of photos shared on Facebook (some 140 billion as of last year), Facebook is not the leader among photo-sharing services. That position has, in fact, been vacant ever since Flickr started to decline in popularity, somewhere around late 2010 or early 2011. One of the hottest contenders, however, is Instagram, which figured out the importance of sharing, as well as the mechanics of how mobile phone users in particular will share their images.
I also think Facebook will make good on its word to develop Instagram. As Zuckerberg wrote, "we will try to help Instagram continue to grow by using Facebook's strong engineering team and infrastructure." Facebook has the ability to scale up fast, which Instagram needs if it's going to take that position as photo-sharing leader.
It's also worth noting that Instagram has captured the mobile photo-sharing market better than Facebook.
2. "Cool" Injection
Here's how Facebook CEO Mark Zuckerberg put it: "[P]roviding the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together." Even in this statement, you can almost hear Zuckerberg admitting that something's missing from Facebook's current photo-sharing options. That "something" is an element of cool.
3. Young and Growing User Base
Back to the original question of why Facebook would want Instagram, one of the answers is because Facebook is looking bloated.
Instagram, on the other hand, is still young and slightly misunderstood; how many people said to you today, "I don't know why anyone would even want to use Instagram?" It's not quite as hip and underground as it was in 2010 when it first debuted in the Apple App Store, but it's still seen as edgy - those daringly intense photo filters, the one-liner captions, the themes of the photos themselves embracing young and often urban American culture.
Facebook, on the other hand, is popular. Perhaps too popular. It's certainly not young, hip, edgy, or exclusive anymore. It's huge. It's full of people from all walks of life, from all over the globe, from your mother to your kids to your pizza delivery dude. It's mainstream. It's bloated with people and services and even photos. Facebook knows, especially now as its IPO is looming, that it needs to stay fresh. It can achieve that aim in one fell swoop, and for a cool $1 billion, by picking up Instagram.
For more, see PCMag's full reviews of Instagram for iPhone and Instagram for Android, as well as the slideshow below.
