April 10, 2012 Leave a comment
The Facebook acquisition of Instagram is amazing on so many levels. A billion dollars certainly gets a lot of attention, particularly when you are talking about a company that employs only about a dozen people. But as a defensive move it is brilliant. The launch of the Android Instagram app has phenomenal growth potential for Instagram – and thus is a critical strategic acquisition for Facebook as they launch their IPO.
First, consider the amazing growth of Instagram – even when it served less than half the mobile OS platforms; Apple only, up to just recently with the roll out to the Android platform.
Now look at the Apple user versus the Android user. There in this Nielsen report the significant differences that jump out include use of the picture feature. Clearly the Android user is much more likely to picture message and picture download. The opening of the younger Android market has the opportunity to launch another Instagram growth spurt. One that could truly threaten Facebook as it addresses a huge Android population that is similar in size to the Apple user numbers.
So at a billion dollars the acquisition is a cheap way to stop the user flow to another application and a great way to insure a continued strong IPO outlook: another savvy move by Facebook.