As you may have heard by now, Facebook bought Instagram for $1 billion dollars.
According to Om Malik of GigaOm, that's twice the market value given to Instagram, but Facebook gladly paid that up for one simple reason: genuine fear from possible competition.
From Om's analysis:
The answer [as to why Facebook would buy Instagram] is found in Zuckerberg's own blog post:
This is an important milestone for Facebook because it's the first time we've ever acquired a product and company with so many users. We don't plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together.
My translation: Facebook was scared shitless and knew that for first time in its life it arguably had a competitor that could not only eat its lunch, but also destroy its future prospects. Why? Because Facebook is essentially about photos, and Instagram had found and attacked Facebook's achilles heel -- mobile photo sharing.
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