Facebook has agreed to a deal to acquire mbile photo sharing app Instagram for approximately $1 billion in cash and stock. Initially Instagram will remain an independently branded standalone app that’s separate from Facebook, but the services will increase their ties to each other and it can be expected that Instagramm will eventually be folded into the Facebook brand. Although Instagramm is not making any money yet the price can likely be considered a bargain, at least compared to to eyeball valuations of Internet solutions over the past decades. Plus Facebook is in need of diversifying its positions given its current strong currency which won’t last unless the company can prove to create significant revenue from its stronghold in the social space. But the most compelling reason for the acquisition was likely the user demographic: Instagramm does not have an age limit. A large number of the user base are therefore future Facebook users (or would-be Google+ users!).
Archive for April 2012