A billion dollars is a nice round sum. It’s about 1% of what Facebook is worth, if its initial public offering goes as planned. But what exactly does Facebook get for its billion dollars with the purchase, announced Monday, of photo-sharing network Instagram?
Instagram, which is only two years old, reportedly hasn’t turned a profit yet. It has 10 employees, or maybe 13, depending on which source you check. It has about 30 million active users, which is about 6% of Facebook’s user base. It was valued at about $500 million for its latest round of venture capital funding, according to Bloomberg News.
Surely Facebook didn’t buy Instagram just to infuriate Instagram users, although many of them seem to be truly appalled by the news.
Most other observers seem simply startled, but various thoughtful people have come up with the following possible reasons for the purchase:
- CNET suggests that Facebook might be buying a better user experience for its mobile services, which have plenty of users but aren’t very good. They’re not very lucrative, either, a fact that Facebook acknowledges in its IPO filing.
- Forbes writer David Coursey suggests that the Instagram purchase is all about strangling Pinterest in its cradle. Pinterest has maybe 10 million users, but it has all the cache of being the hot new social site. Like Instagram, its approach to social sharing, and its appeal, is visual. So, maybe Facebook can incorporate Instagram’s visual attributes into its not-so-beautiful interface.
- VentureBeat has a related reason, suggesting that Facebook can use Instagram to enhance its recently implemented Timeline feature. Facebook has great expectations for that Timeline. They’re evidently hoping that users dump their entire personal histories into it.
All of the above are perfectly sensible suggestions, although it’s hard to believe that those 10 or 13 Instagram employees have some knowledge, skills, or tools that elude Facebook’s force of 2,000-plus.
Here’s one more thought, from The Guardian site: Maybe Facebook bought Instagram just to keep it out of Google’s (GOOG) clutches.
The fact that Instagram just introduced its app for Android devices lends weight to this argument, especially since that app got a million downloads on its first day.
Facebook and Instagram both say that the photo-sharing services will continue to be available independent of Facebook.
Web Watch In Brief:
Netflix (NFLX) is working on keeping its subscribers coming back for more, rather than defecting to other video services. It is working on fine-tuning the algorithm that coughs up personalized recommendations to users based on their previous choices, according to The Huffington Post. The goal is to please subscribers with a steady stream of choices that Netflix actually has in stock, rather than leave them searching blindly for movies that might not be in stock. Netflix has a historical edge over their competitors: they’ve been working on the algorithm since 1999.
AT&T Fails to Screw Up Lumia Launch
The long-awaited launch of the Nokia (NOK) Lumia 900 with Microsoft (MSFT) Windows appears to be going smoothly, despite the worst efforts of partner AT&T (T). Could AT&T have possibly set its big launch date for April 8 without realizing that its own stores would be closed for the Easter holiday? Yes, it could, and it did.
Amazon (AMZN) saved the launch day by offering the Lumia 900 for $49.99 for new AT&T sign-ups, half the already-bargain regular price. The device quickly won the top two slots on Amazon’s best-selling phones list, for its black and cyan models.
Big hopes are riding on the Lumia 900. It’s supposed to goose Nokia’s share of the US smart phone market, not to mention win Microsoft Windows a respectable position as an operating system for smart phones.
Google’s Tablet Plan
A few details are emerging about Google’s plans for its own tablet computer. It will be a 7-inch Android device, co-branded with Asustek Computer of Taiwan, according to eWEEK. The tablet is expected to be priced at the low end, around $200, to compete with Amazon’s Kindle. A late-summer introduction is planned.
Since Google is set to release its quarterly earnings on Thursday, you may be interested in knowing what’s important to Larry and Sergey right now. Larry Page just published his annual CEO Update, and he makes it apparent that one of the important things to him right now is a “seamless” experience across all of Google’s products. The potential is powerful, as Page describes it. But it involves the collection and use of personal data across the Web, and we already know that scares the pants off of a lot of people, including Internet privacy advocates.
By Carol Kopp
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