You should have known by now that the social networking giant Facebook has made a bold (and very expensive) move as it made a deal to acquire Instagram for $1 billion in cash and in stocks.
The deal was announce Monday by Facebook CEO Mark Zuckerberg in his Facebook Timeline and I quote:
“This is an important milestone for Facebook because it’s the first time we’ve ever acquired a product and company with so many users. We don’t plan on doing many more of these, if any at all. But providing 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.”
For those who are not familiar with Instagram, it is a photo sharing application that was launched last October 2010. Its founder was Stanford graduates Kevin Systrom and Mike Krieger. This application was initially available for iOS device like iPhone and iPad but recently, the application has been made available for Android phones as well. It lets users take pictures and edit the photos with the differet filters available like Sierra, Lo-fi, Nashville and more that gives the picture a retro, cool and vintage feel. Instagram users can then share these photos in the site and with other social networking sites like Twitter, Facebook and Flickr and other members can “Like” the pictures and add comments.
Instagram has gained 30 million users in just 18 months and has been ranked as the top mobile photo sharing application in 2011. When the Instagram for Android was launched last week, it gained 1 million downloads immediately.
A lot of Instagram users have expressed their feelings and many are not happy about the acquisition. But Instagram’s CEO, Kevin Systrom, has emphasized that Instagram users should not feel alarmed as the application is not going away after it has made a deal with Facebook. They will instead be using Facebook’s solid engineering to create a better photo-sharing application. Facebook’s CEO has confirmed this by saying that it will leave Instagram as an independent application rather than integrating everything to Facebook.
But financial experts are all saying that $1 billion is too much for a profitless organization that has only 13 staff. This sums up to $76 million per employee. So why did Facebook decided to go ahead with the deal?
Instagram is more than just a photo-sharing application. It allows for its members to communicate with each other and with beautiful photos to spice up the interaction. And with its 30-million++ members and growing, it is becoming a very powerful social networking site in a very important platform: mobile. Thus Facebook might have seen Instagram as a competitor.
Is $1 billion all worth it? As what Mark Zuckerberg has mentioned, they will use the strengths of Instagram to build a better social networking platform. Allowing them to tap and utilize Instagram’s social networking power in mobile will really help Facebook in maintaining their position as the number 1 social networking site to date.