Forgot your password?
typodupeerror
Facebook Businesses The Almighty Buck News

Forbes Likens Instagram Purchase To Myspace Deal 105

Posted by Unknown Lamer
from the monetizing-hipsters dept.
theodp writes "It's not that Chunka Mui isn't impressed by the smarts of Instagram CEO and Forbes cover boy Kevin Systrom. Still, Mui can't help but ask, 'How Long Before Facebook Writes Off Its $1B Purchase of Instagram?' While pundits and analysts have almost universally praised Facebook's acquisition of Instagram, Mui is less-than-impressed by Instagram's 80 million unmonetized mobile users. 'My prediction,' writes Mui, 'is that we'll look back on the acquisition as a bust — much in the same way we now view News Corp.'s purchase of Myspace, AOL's purchase of Bebo, and Excite@Home's purchase of Blue Mountain Arts.' Ouch. Mui notes that according to a recent SEC filing, Facebook could ditch the deal by paying a $200 million fee if regulators block the merger or if Facebook terminates the agreement after Dec. 10, 2012."
This discussion has been archived. No new comments can be posted.

Forbes Likens Instagram Purchase To Myspace Deal

Comments Filter:
  • Nope. (Score:2, Insightful)

    by niix (839104)
    To me it's more like Facebook is grasping for relevance by purchasing Instagram. Facebook will fade out while Instagram will continue to gain popularity.
    • Re:Nope. (Score:5, Interesting)

      by Skarecrow77 (1714214) on Wednesday August 08, 2012 @09:12AM (#40917127)

      I see it the complete opposite. Instagram was last month's "words with friends" or "draw something" or "pintrist" or whatever. It was the obsession-of-the-moment for the barely-computer-literate, and from a completely anecdotal point of view, I've seen its popularity drop off tremendously in just the past few weeks. I used to see it all over my wife's tumblr feed and my facebook, and now it's showing up way less often. the new obession-of-the-moment are these creepy animated gifs apparently, that only show like 12 frames at a time of a movie or tv show. I don't get it, but then, I guess it's not "for me".

      Facebook on the other hand, for all the complaints it always garners, appears to be going as strong as it ever was, at least as far as I can tell. If there's something new and more popular on the horizon for all the tweens and children, I haven't heard about it yet. That said, FB seems to be constantly slightly reinventing itself successfully every 6 to 12 months, adding some new feature or some new integration to keep its users interested for the next little bit. I don't know if it's Zuckerberg or his underlings doing it, but there's a pretty intelligent hand directing that company (well, perhaps not their mergers and aquisitions dept). I don't see FB going anywhere for a good while yet.

      I'm not saying I'd buy stock in it of course.

      • Re:Nope. (Score:5, Insightful)

        by serviscope_minor (664417) on Wednesday August 08, 2012 @09:17AM (#40917177) Journal

        creepy animated gifs apparently, that only show like 12 frames at a time of a movie or tv show

        Well, think of it like a fake ageing filter for the purely digital realm. You take a perfectly good image sequence from a movie then "age" it to make it look like it would in 1996, by using a 256 entry pallette and a limited number of frames.

        In that way, it's just like the instagram it replaces.

      • Re: (Score:3, Informative)

        by trnk (1887028)
        http://cinemagr.am/ [cinemagr.am]
      • Re:Nope. (Score:4, Informative)

        by larry bagina (561269) on Wednesday August 08, 2012 @10:08AM (#40917667) Journal
        If we don't, remember me [tumblr.com] has been around since late 2010.

        If Instagram had three jump-the-shark moments, the first was version 2 that removed and altered some filters. The second was the android version that brought in lots of new users and lots of mediocre cameras. The third was the facebook purchase.

        • by AbRASiON (589899) *

          You're one of *THOSE* morons are you?
          The "ewwwwwwwww Android" crowd who talk about their ultra elite Apple phones and how Android phones are for poor people? We all saw the idiot, elitist twitter posts - you people are embarassingly stupid.
          https://www.google.com.au/search?q=ewwww%20android%20twitter%20instagram&hl=en&meta= [google.com.au]

          Guess what? The iphone 3 had an AWFUL bloody camera, the 3GS was somewhat better and the iphone 4 had that ridiculous green blotch in the middle.
          True definition of idiot Apple user

      • Re:Nope. (Score:5, Interesting)

        by Enderandrew (866215) <enderandrew@noSPam.gmail.com> on Wednesday August 08, 2012 @11:05AM (#40918281) Homepage Journal

        A buddy of mine works as a social media consultant. He went to a high school and asked the students which social networks they used. Tumblr and Twitter were the most popular and most of them no longer used Facebook.

        Facebook's stock is down. Several major companies have declared they're abandoning Facebook advertising. One company claims they have evidence that most clicks of Facebook ads were by bots and that Facebook refused to allow them to change the name of their page unless they upped their advertising by $2,000 a month.

        Last year Zynga was the popular company that everyone declared the future. They were going to surpass EA, except now they're in the toilet. Casual social games was the second most popular activity on the internet last year (behind checking email) and it has already given way to mobile gaming. Zynga's success fed Facebook's success in generating tons of new pageviews. As social games are declining, so are Facebook pageviews.

        Facebook is not as strong today as it was last year, and I doubt it will always remain the most popular social network.

      • by ArhcAngel (247594)

        Instagram was last month's "words with friends" or "draw something" or "pintrist" or whatever

        Yeah everyone I know if moving from Pintrist to Manteresting [manteresting.com]

      • by rtb61 (674572)

        You forget the names behind Facebooks IPO, Goldman Sachs. The whole idea of the purchase was to create the illusion of Facebooks ability to spend 1 billion dollars buying another company, basically in reality turning Facebook shares into junk bonds. The idea was to use the Facebook junk bonds 'er' shares to buy up other companies and create long term value where none existed by buying it in but the shares crashed and the insiders bailed, well, as much as they could get away with. All social media sites to

    • Re:Nope. (Score:5, Interesting)

      by vlm (69642) on Wednesday August 08, 2012 @09:21AM (#40917221)

      To me it's more like Facebook is grasping for relevance by purchasing Instagram. Facebook will fade out while Instagram will continue to gain popularity.

      This is somewhat insightful but takes more explanation.

      I'm technically a "user" of linkedin. I haven't logged in for at least a year or two. Its impossible for linkedin to monetize me. I don't look at their site and incoming emails from them go to the spam folder. The same thing happened to me with facebook. Initial rush of friending and impressing people I don't know or care about. Then boredom sets in. Finally I stop logging in. At this point FB can no longer monetize me. Eventually I deleted my FB not because I was using it and deleting was making some kind of political or privacy point, but because I was no longer using it so it made no point to keep it around any longer as a insecurity vector etc.

      On the other hand a pic sharing site only exists as its used. Unlike linkedin, I can't say I'm a instagram user unless I'm logging in and having advertisements shoved in my face (well, if I haven't been using an ad blocker since the 00s, anyway). Like reddit or 4chan or /. or a blog, I guess, all the viewers are viewers, not just dead unused accounts.

      Or the medium length version is Linkedin / FB / G+ can have millions of "users" who never get spammed because they never log in, but ALL instagram viewers inherently are spamable.

      Its kind of like how a chicken has a distant relationship with my breakfast, but a pig is 100% committed to my breakfast. The chicken can always lay another egg, or not, whatever. The pig however is fully and permanently and forever involved with my bacon.

      • by Anonymous Coward

        Oh no. Not that #@$! chicken and pig analogy again.

        I can't tell you how sick I am of hearing that being repeated as if it a were fresh and new insight every time.

        • So ... you are saying you want a car analogy?

        • by lennier (44736)

          Oh no. Not that #@$! chicken and pig analogy again.

          So... what you're saying is, the chicken moved the pig's cheese?

          I think I speak for us all when I say that, at the end of the day, going forward, the take-home is that we need to architect an action plan that leverages our strategic core competencies with buy-in from stakeholders across all silos to create stockholder value by outsourcing our right-sized just-in-time business processes to the Cloud. Radically, and to the max.

      • Re:Nope. (Score:4, Insightful)

        by SomePgmr (2021234) on Wednesday August 08, 2012 @09:38AM (#40917349) Homepage

        I'm not sure your (or my) Facebook use is entirely typical. At least their last two quarterly reports suggest that they're still increasing monthly active users by the truckload. That's not just new sign-ups. So overvalued? At like a 115 P/E, absolutely, unless they can find a good way to start making real money in mobile. I don't see the whole service falling off the MySpace cliff of irrelevance any time soon, though.

        Instagram I never really understood. I suppose facebook could use it to boost their oft-maligned mobile app and roll the addicted users into the fold. Maybe. I don't know if it could pay off to the tune of a billion dollars though. At least it puts all that content inside their gates, for whatever that's worth.

        • by ArhcAngel (247594)
          Perhaps you weren't aware of the latest numbers? [cbsnews.com]

          For a site that lives and dies by its unique visitors a 4.8 % drop in 6 months could be...unsettling.
          • by SomePgmr (2021234)

            Interesting that comScore says they lost uniques while their quarterly report to US financial regulators says:

            "Monthly active users climbed 29% from a year ago at 955 million and daily active users rose 32% to 552 million. Mobile monthly active users were 543 million, up 67%."

            There's more in the report broken down by quarters, but I'd say there's a disconnect in there somewhere.

      • Linkedin DOES make money from your account. Not your money, but the money of headhunters looking for job candidates. And they couldn't do that without user profiles, in use or not.

      • Re:Nope. (Score:4, Funny)

        by Quiet_Desperation (858215) on Wednesday August 08, 2012 @10:13AM (#40917713)

        Vat grown bacon is just around the corner. Pigs are expendable.

        • Vat grown bacon is just around the corner. Pigs are expendable.

          So some day we will be sick of that analogy about "Malibu Chicken", chickens and vats.

      • by styrotech (136124)

        Its kind of like how a chicken has a distant relationship with my breakfast, but a pig is 100% committed to my breakfast.

        You eat a whole pig for breakfast?!?

        I would've thought that the pig was at most a few percent committed to your breakfast.

    • by ceoyoyo (59147)

      Instagram is another example of something that is so absolutely trivial to code that the second they try to monetize it users will abandon it in droves for it's ad free replacement.

      Facebook itself is kind of like that, except there's actually a network effect to keep people on it.

      • Facebook itself is kind of like that, except there's actually a network effect to keep people on it.

        This network effect is limited to the groups or super-groups of people on it.
        People not affiliated with any of them won't necessarily flock to FB for no reason.

        I'm not speaking about geeks who are anti-anything-social.

        I'm speaking about generations. You are on Fb, because your friends are on it, your family is on it, your significant other is on it, and so on.
        Your kids, on the other hand, go through a different situation: their main social circles are their school friends and other of similar age group. Not

  • by mister2au (1707664) on Wednesday August 08, 2012 @08:56AM (#40916991)

    Clearly the acquisition of Instagram was a defensive move in the social networking space - it was starting to build a market that would otherwise chip away at Facebook - and you'd think they learnt their lesson from letting Twitter grow into a competitor

    So, of course, you'd expect it to get written-down as just enough functionality is incorporated into Facebook to ensure another competitor doesn't pop up in the same "social photo" space. But also expect them to let it die a slow death (rather than shut it down) to maximise the defensive value of the acquisition.

    • by Anonymous Coward
      Except it's not really a market. An easy way to send pictures is nice but simple to copy, and users can go somewhere else on a whim.
      • by crazyjj (2598719) *

        Hah! Like they haven't already patented "a method of sending a digital photograph over the internet."

      • Might be simple and easy to replicate but http://en.wikipedia.org/wiki/First-mover_advantage [wikipedia.org] is important

        The marginal benefits of switching to an equivalent is always small for such a simple product and being a mass market social media product dictates that people will gravitate to the market leaders - that is, little point in joining a social platform is no-one else is there

        So that limits Instagram competitors to:
        - niche "photo" markets such as where Flickr is now placed
        - disruptive "photo" products like P

        • by ceoyoyo (59147)

          Except that Instagram posts on Facebook, and so can any other app. Nobody cares if my chic artificially aged photo was posted with Instagram or Fastergram or AAAAFastestGram. I don't know any Instagram users, but Facebook itself must be weakening the community lock in of it.

          • Are you aware that Instagram also had its own networking aspects away from Facebook?

            In the same way you tweet to Facebook but Twitter has its own standalone network as well.

            • by ceoyoyo (59147)

              Yes, I am. My point is that Instagram's community is weakened because you can see people's pictures on Facebook. You don't HAVE to use Instagram.

        • "First-mover-advantage" for sending photos would have been a valid point for email, but not for instagramm. That goes to show that we don't have a traditional market here. Somehow Instagram was successfull DESPITE not offering any added value.

          • Agreed but Instagram's market is not sending photos - email, facebook and phone messaging did that just fine - that is just a commodity market now (every smartphone and $50 camera can do that) with little differentiation other than scope of recipients.

            The Instagram market is around the filters and allowing people to express themselves via that, rather than just 'capturing' the moment. The sharing is secondary in this context.

    • But then, would Instagram accept to close the deal for less than $1B? Let's say, $500M, $100M..?
  • by Anonymous Coward on Wednesday August 08, 2012 @08:57AM (#40917011)

    I said this back when the deal happened.

    $1B for a service used by self-absorbed 'hipsters' to take photos of food and who pay nothing for it? Nuts!

    • by Anonymous Coward on Wednesday August 08, 2012 @09:20AM (#40917209)

      I said this back when the deal happened.

      $1B for a service used by self-absorbed 'hipsters' to take photos of food and who pay nothing for it? Nuts!

      You might be surprised how much of a service economy is run by self-absorbed hipsters.

      With young people it's paying extra for things like Apple hardware when equivalent or better alternatives are cheaper. Apple has built significant brand loyalty among these people because they know how to market. Facebook is like a well known brand name, except it's an even more efficient way to get lots of attention while doing nothing particularly significant.

      WIth old people it's being waited on to feel served and important. They'd rather stand in line at a service counter even if what they want is trivial, even if it means waiting longer than it would take to do it themselves, even if they are able bodied and what they want done requires no skill. They seem uncomfortable dealing with younger folks as equals and feel a need to be in some kind of situation of authority, "customer" being the most readily accessible. They'll try to force waitstaff to listen to stories about their grandkids etc. because they assume random strangers give a damn, and in short they just love a captive audience not allowed to refuse.

      Both are responsible for a large amount of business. Both are not being terribly rational. They are just catering to and trying to satisfy either the attention Daddy never gave them or the fact that they have no friends. You think the recession is bad, remove these elements and it'd be even worse but beware of the broken window fallacy.

      • by vlm (69642) on Wednesday August 08, 2012 @09:33AM (#40917313)

        Very good post AC you should post under your own name to get modded up.

        Your analysis of the customers is spot on with the exception that both your example have immense capital investment to keep competition away and they actually run a profit.

        In example 1 Apple could be displaced merely by spending a trillion or so, but realize they earn a profit on each device.. Chinese slave laborers and political prisoners make a device and charge apple $180 or whatever, they turn around and sell it for $600. Hard not to make money in a market like that.

        In example 2 your apparent restaurant could be competed against by anyone with $1M to construct a building, pay off the zoning commission, hire staff, advertise, buy cookware and food to cook, utilities, etc. Even so, the cost to the provider of a cup of coffee is 15 cents and they sell it for $1.99. Hard not to make money in a market like that, assuming volume is high enough.

        So what stops a neo-hipster from replacing instagram as the new hotness. Well, I can register a domain for $5 and cloud host on amazon or competitors for next to nothing, being more creative than instagram can't be terribly difficult, and there seems to be no way for them to earn a profit. They're screwed.

      • by mcwop (31034)

        I said this back when the deal happened.

        $1B for a service used by self-absorbed 'hipsters' to take photos of food and who pay nothing for it? Nuts!

        Blah Blah With young people it's paying extra for things like Apple hardware when equivalent or better alternatives are cheaper. Blah blah.

        So what if I hate windows, and Linux does not meet my needs but OSX does? I should just buy a virus prone Windows machine cause it costs less? There is more to it than just price. Either way a Mac Air is very price competitive to other comparable ultrabooks.

      • by Mitreya (579078)

        With young people it's paying extra for things like Apple hardware when equivalent or better alternatives are cheaper.

        I am definitely not a fan of Apple. But this statement deserves a response. Apple has a number of products that DO NOT have viable competition. And all the hipster condescension is not going to change that fact.
        For a while, nothing competed with iPhone (I did my research couple years ago and many of competitors at the time were announced products with no set specs). I don't know what the current state of android-based competition is.
        Today (afaik) there is barely any competition to mac book air. I am

    • by Bill, Shooter of Bul (629286) on Wednesday August 08, 2012 @10:00AM (#40917577) Journal
      What? Hipsters don't use instagram. They have phones that you probably haven't heard of and takes pictures you wouldn't understand.
      • by Anonymous Coward

        What? Hipsters don't use instagram. They have phones that you probably haven't heard of and takes pictures you wouldn't understand.

        5 is insufficient.

  • Gee, you think? (Score:5, Insightful)

    by ShooterNeo (555040) on Wednesday August 08, 2012 @09:00AM (#40917035)

    In what universe was this considered a good deal? How on earth does a company that lets users take chintzy photos with a fake aging filter worth 1000 million dollars?

    There's nothing that makes Instagram a natural monopoly : at least with facebook itself, the vast userbase it has makes it a de-facto monopoly. (just like there's only space in front of your house for one power company and one set of roads, there's only time for you to put inane status updates on one social networking site).

    And, worse still, Facebook doesn't have the deep pool of genius level talent like google, so it's entirely possible that Facebook will not STAY on top. But at least it has most of the user base for social networking, and people use it to get stuff done. Instagrams an internet fad that gives the product away for free.

    Shit...for a cool 1000 million, facebook didn't even get a deep talent pool of genius level software engineers. They bought themselves a whopping 10 or so employees. No matter how skilled, 10 folks isn't worth that kind of scratch.

    • by c0lo (1497653)

      There's nothing that makes Instagram a natural monopoly : at least with facebook itself, the vast userbase it has makes it a de-facto monopoly.

      Like others suggested... how do you expect FB to keep its "de-facto monopoly" if it lets others challenge it? (even if on niches... after all FB launched itself in a niche!).

      • Well, I will admit that users can switch to another site moderately easily. But you lose all your current facebook friends and contacts unless you log in periodically.

        It's a weak monopoly. A strong monopoly is something like windows, where you can try to switch, but no other OS can even RUN a huge list of applications, including virtually all games. Even stronger is the power company or ISP, where it's usually physically impossible to switch.

    • by garcia (6573)

      Normally I would say the data collected by Instagram (location, photo subjects, likes, connections, etc) are all worth a good bit of money. However, because Facebook already collects much more than that and the overwhelming majority of Instagram users are also on Facebook, I agree with you in this case.

    • It isn't worth 1000 million dollars. They bought it for 1000 million MOON-dollars: i.e. $1000 million of Facebook stock valued at $38. By the time they'll be able to sell said stock it'll be convertible to closer to $100m than $1000m.

    • Those are the wrong comparisons.

      Try:
      Time Warner's merger with AOL.
      Any fool that bought facebook at IPO . . .

      hawk

  • by mwvdlee (775178) on Wednesday August 08, 2012 @09:14AM (#40917155) Homepage

    While pundits and analysts have almost universally praised Facebook's acquisition of Instagram.

    Which pundits and analysts exactly? Because all I ever heard was how utterly insane the acquisition was.

  • A Forbes cover? Wow (Score:4, Interesting)

    by crazyjj (2598719) * on Wednesday August 08, 2012 @09:16AM (#40917161)

    Well I think we all know that a making the cover of a business magazine [forbes.com] is pretty much the guaranteed path to a bright future in the internet startup world.

    • by aclarke (307017)
      I'd still be happy to be worth about $8M [celebritynetworth.com]. Sure, it could have been more, and at one time was on paper, but if this is true he still has done really well for himself.
    • Keven Rose did allright for himself by selling digg. Digg itself? Well not so much.

      The instagram guy will do pretty well for himself after selling out for a billion. Instagram? Probably not.

      I think by any measure they have a bright future as individuals.
  • Users (Score:5, Informative)

    by ledow (319597) on Wednesday August 08, 2012 @09:24AM (#40917249) Homepage

    Apparently, "number of users" is now more important a metric than how many of those users are giving you money, or how much.

    Just because they have 80 million users means NOTHING. There are at least 60m estimated users of Linux (if not a lot more) - it doesn't mean that ANY of them are generating any money for Linus et al.

    If you have ONE user who's paying you money for your service, that's more valuable than 80m who aren't. Sure, you can get some ad revenue off the 80m if you play it right but that's dropping all the time, costs a lot to administer and doesn't provide massive amounts of profit direct to you. And the slightest change means that those 80m people - who have NOTHING invested in your business - will just move elsewhere. The same as MySpace users suddenly flocked elsewhere.

    If they were paying customers, they would have a say, they would have a reason to stay, they would have a reason to explain to you what they didn't like and where/how you're better than the competition. If they're unpaying, they don't. The second you break the site for them (e.g. even putting an ad up in some cases), the second you lose all those users.

    Users means NOTHING. Revenue means something. If your not monetizing your users, then you're not running a business and, thus, your business value is zero. It's like running a "free-to-play" game. Of COURSE you have 10m users. It's a free game. But if you can't turn X % of those users into paying customers, you're just pissing away development time and money.

    It's like saying that when you gave out free samples of your cologne, a hundred thousand people asked for one. But when you charge £1 a bottle, you WILL NOT make hundred thousand pounds. Of course you won't. Anyone that thinks so is an idiot. However, if you said you had a cologne where out of the hundred thousand people, thousands of them paid you for it because it was so good, then you'd have a viable business. But still, when you start charging, you won't necessarily sell a bottle for every person who expressed an interest.

    Any sale, on any stock market, that includes the figure of how many users - without context of how many were paying and/or how much profit they make per user - is worthless and only a sign that someone, somewhere is going to make a quick buck from all the idiots trying to buy the IPO by selling out extremely early before the ship sinks.

    Users do not matter. I can have a hundred thousand visitors to my website, or ten thousand registered accounts. It does not mean that I would ever get a SINGLE paying customer at all, even if I changed nothing else.

    • by mooingyak (720677)

      Apparently, "number of users" is now more important a metric than how many of those users are giving you money, or how much.

      I got the idea in my head that rather than facebook, you were referring to 'your mom' (not yours personally, but rather that you were explaining what metrics are and are not useful when discussing one's mother).

      Any sale, on any stock market, that includes the figure of how many users - without context of how many were paying and/or how much profit they make per user

      Once I got the thought stuck in my head, various parts made me giggle, but that one the most. I need to grow up.

    • You are correct ...

      But if you take 80M of my profitable customers from me, it doesn't matter if you make no profit from them or not - I might be happy to just pay you $1B to go away

    • by ceoyoyo (59147)

      Sssh. MBAs aren't all that great at math and they've discovered a SINGLE NUMBER that lets them assess the worth of a company. So much simpler than having to know about revenue, profit, growth, market characteristics, etc. Why do you think high frequency trading is so popular?

      • mmm ... guarantee there are not many HFT that are also MBAs ... completely different segments of the financial markets

        it is widely reported that Mark Zuckerberg engineered the whole acquisition over a 3 day period and I'd guarantee it wasn't done on a $/user basis

        but more importantly, it would be the MBAs and investment banks telling the Facebook founders to get out - quite an astute recommendation ... while it would be the uneducated mom-and-dad investors investing ... so who's the dummies there?

        • by ceoyoyo (59147)

          Not necessarily the same people, but a similar one-number approach.

          "it would be the MBAs and investment banks telling the Facebook founders to get out"

          Now. Don't forget, it was the MBAs and institutional investors who bought and priced Facebook shares at a ridiculous valuation.

          "while it would be the uneducated mom-and-dad investors investing"

          Investing in what? I don't follow.

    • Users do mean something. They represent potential revenue sources. You're correct that you do need to figure out a buisness model that does generate revenue from them inorder to survive as a buisness.They are one of several variables in an equation. You are so upset that people ( the media) pay attention to that one variable, that you discount its value too much. Classic knee jerk over reaction.
  • I love Instagram. If they stayed private, I have to imagine they have little overhead, and making a living for a handful of employees would not be hard - they would not have to monetize their base all that much. While they do have ways to make money in the latter scenario, it likely will not provide enough revenues to make the $1B purchase price worth it for Facebook. While I like FB from the perspective of connecting with family and friends, their UX is becoming annoyingly complex. Networks such as Path, G
  • by Schwhat (1993980) on Wednesday August 08, 2012 @09:26AM (#40917271)
    The following explains what the popular social media currently are and what they do differently: http://www.designverb.com/wp-content/images/2012/04/social_media_donut.jpg [designverb.com]
  • It's hard to monetize 80 million users of a service that doesn't do more than any other free picture posting site out there.

    I bet if someone tries to charge for that, sending photos by email will become popular again.

    • by mcwop (31034)
      Maybe a company like Coca Cola pays Instagram to hold a contest for best Coke brand photo? The user gets a prize of $25,000. I bet people will use Instagram over email. Users pay nothing,
      • Why should said company do so instead of holding that contest over email? No money to pay to a useless service, even more potential users as they don#t need to sign up for instawhatever.

        • by mcwop (31034)
          Anything is possible. But don't underestimate the user's ease of just putting it up on IG, versus taking photo, attaching to email, sending somewhere, getting posted to some app or site that I probably have to sign up for etc......
          • posting to some app or site that you have to signup for.... like instagram for example?!?!

            compared to email that's already on my phone?

            • by mcwop (31034)
              So you will give the world access to your email to see said pictures? I suppose your email has photo editing? Like and commenting? IG has a large built in user base, its a nice little app. Sorry, but email does not come close to providing the same user experience. IG created a nice product and a lot of people use it. With that said, the $1B price tag is retarded IMO.
        • by gl4ss (559668)

          ..because the users wouldn't know of the compo without instagram.

          so what he's saying, the free service would be used as an advertisement vector, duh.

  • So did I. When it was announced.

  • I don't know what they're talking about, MySpace was already long dead when News Corp bought them (where dead is defined as no longer the place where everyone and their mother's cousin creates an account). I was laughing at them the day they bought it, no need for hindsight on this one!
  • The value of Instagram to Facebook has nothing to do with photographs per-se. Mining trends based on GPS location coordinates embedded within the EXIF data of the file, deriving nearby businesses from this, the time-of-day, and identifying groups of people based on facial recognition are the purpose. Then string together multiple photographs over time. These data sets are then correlated and sold. As long as people keep submitting pictures it's worth a fortune.
  • Microsoft got into search as a defensive move against Google. They lost money on it.

    Google got into online documents and spreadsheets as a competitve move against Microsoft's moneymaker, Office. That didn't make Google money.

    Google got into phone software as a defensive move against Apple. That hasn't made money.

    News Corp bought Myspace as a defensive move against online. That was a disaster.

    Time/Warner merged with AOL to get into "the Internet". That was a disaster and they broke up.

    Google got

    • by Phelan (30485)

      Pretty sure Android is profitable for Google. (est $3.7 billion per year in revenue)

      Can't validate the comment on Google Docs but I'm pretty sure their enterprise Google Apps Domain accounts continue to grow

  • A large part of Instagram's value exists in the experience and strategies that allowed an initial three employees to manage a scalable, distributed application serving 10s of millions of customers. If Facebook is able to successfully incorporate Instagram's knowhow into their current stack, they could see significant savings in operations and management. That, alone, is worth billions of dollars.

    More on Instagram's architecture [highscalability.com]...

This screen intentionally left blank.

Working...