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Tuesday, April 10, 2012

Facebook acquires Instagram in $1 billion deal

I just started using instagram even posted a few pictures filtered through Instagram over at Electric Moleskine. This is an interesting development that caught me by surprise but then I really don't follow the tech scene like that!
Instagram, an Internet start-up in San Francisco, has no revenue and about a dozen employees. It has not yet celebrated its second birthday. But to Facebook, it is already worth a billion dollars.

Facebook announced on Monday that it would pay that much in cash and stock for Instagram, the latest big winner in an industry that seems to be more awash in money by the day.

Instagram joins other out-of-nowhere Internet hits like Groupon and YouTube. The acquisition, which is Facebook’s largest to date, could give it a stronger position on mobile devices.

Instagram is essentially a social network built around photography, offering mobile apps that let people add quirky effects to their smartphone snapshots and share them with friends.

It has dozens of competitors, but Instagram stands out for its fast ascension and almost cultlike following. It has 30 million users who upload more than five million photos a day, even though it was available for only Apple devices until last week, when the company released an Android app.
Another angle to this story:
Instagram's steep price tag — roughly the same as Peet's Coffee & Tea or Jack in the Box— raised eyebrows among many, including analysts who drew parallels with outlandish acquisition deals associated with the Internet bubble of the late 1990s.

"Facebook will never make that $1 billion back, but it's still smart," says Patrick Moorhead, principal analyst at Moor Insights & Strategy, who deemed the move "defensive."

"Instagram was the only thing challenging (Facebook's) dominance in photo sharing," Moorhead says.
 Yet another angle to this!
Think about the contrast: Facebook’s campus holds thousands of staffers, including a highly trained army of crack engineers. In fact, Facebook is so dedicated to excellence in engineering that it hosts the annual Hacker Cup, a speed programming competition that requires participants to solve algorithmic puzzles of maddening complexity.

Instagram, on the other hand, has 13 employees, total. They’ve labored hard and well to produce an app that’s loved by 30 million users around the globe, but now they’ve also got the resources of one of the world’s engineering giants.
And another angle to this!
Immediately after the reported $1 billion purchase was announced, some digi-pundits were already rushing to say just that -- with plenty offering advice on how Instagram users can delete their accounts and all of the photos they've uploaded with the app.

Some cited Facebook-related privacy concerns.

That line of thinking goes like this: Instagram, a mobile network where people share filter-altered, hipster-y photos with friends, feels small and intimate. By contrast, Facebook feels too big and tries harder to profit off of the data its users submit to the site.
With my iPhone which is still very new to me and now Instagram is very new to me now as well. Time will tell what Facebook can do with this app. Will it improve or will it disappoint?

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