Acquiring Instagram could, at one stroke, achieve control of mobile photo sharing and its future. Photos had suddenly become easy to take, touch up and send – gone were the days of digital cameras, instead you shot with what you talked on. Photos were suddenly the new ‘cool’ ingredient in social networking, and impossible to ignore in their new, mobile avatar.
If all that sounds to us mortal folks like there’s money to be made, to Zuckerberg it would probably sound like the hum of presses printing money, billions more of it. Here was a route to monetizing the huge customer base that used mobile phones to click pictures. Anything was possible – advertising, data mining, mobile wallets…what have you!
Instagram could also prove to be complementary, more so if its photo sharing capabilities could be seamlessly integrated into Facebook. Besides, there was no getting away from the fact that in many ways Facebook was also everybody’s photo album, and in the future the source of many memories and nostalgia. Instagram would make these memories so much better to look at and do wonders to enhance Facebook’s own overall visual appeal.
Here’s a thought – Zuckerberg probably figured that Instagram was good for taking away 10 to 20 percent of Facebook’s user base in the coming years. Given that view it was a great opportunity to be had for a billion bucks. But as this is written, I hear that Instagram boosted its user base by 10 million after the acquisition was announced. How’s that for an almost instantaneous haircut in the effective price paid per user due to the Zuckerberg effect?
And lest we forget – a billion bucks spent a month or so before your IPO sure gives you a lot of publicity and hype for boosting bullish sentiment!