Facebook + Instagram = X

Just what that X stands for, we don’t know… yet. That’s the biggest question on a lot of folks minds. Why would Facebook pay $1 Billion dollars for Instagram, the photo editing app available for iOS and most recently Android devices? Because it can.
That’s my opinion. When Instagram CEO Kevin Systrom said that he thought Instagram could get to 100 Million users, that’s serious user base. Now, Facebook has 850 Million users. Sure, their goal is to get to 1 Billion. That’s a given. But I don’t think that’s why Facebook made this purchase. Facebook’s ever growing user base will eventually get it to 1 Billion. Facebook already has photos. In fact, Facebook users upload about 100 Million photos a day! But Instagram has something that’s pretty nifty that Facebook doesn’t have. A simple, easy to use, FAST app that handle photos, and handles them very well. It also is a growing “social networking” site, that has hug potential. Molly Wood, on CNET writes, “But Facebook doesn’t need users. Facebook hasusers–some 850 million of them. And while I’ve argued that Facebook’s growth potential is slowing, the social network could scoop up another 100 million global users with its eyes closed over the next year, especially as its global expansion increases. And I’m not sure Facebook is in the market for more users so much as it’s in the business of figuring out how to make money off those users. So far, Instagram represents more users, but not any more revenue: more mouths to feed, if you will. Facebook shouldn’t be after more un-monetized users, at this point.”

Well, Instagram, as far as know, hasn’t found a way to make money off its users. Generally speaking, you get a bunch of users and then make money off ad revenue. That isn’t happening with Instagram, so you have to look at what the potential is. Some circles say that Facebook bought Instagram for the mobile aspect. Instagram does mobile very well. Facebook has to scale down its entire PC experience for mobile, and some of it is slow (blame HTML5 some will say). Instagram does mobile very well, and perhaps that’s worth buying. Couple that with the fact that Facebook arguably took out a competitor, and sure you have the makings of a successful purchase. But it’s the same story as the Microsoft purchase of Skype. When that first went down, we didn’t know why or if it was worth the amount it paid for it. Any sum for this purchase would have been criticized anyway. But theories are abound, and it just makes sense that Facebook can add some additional diversity to its portfolio.

I have a sneaking suspicion that once this IPO takes place and once Facebook receives this massive influx of cash, it will be able to do what it wants. I think then you’ll see some more acquisitions, more intuitive apps and features, and a more positive mobile experience. In due time, as they say… In due time.

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