Based on a recent report published by Reuters, Facebook plans to buy Instagram in exchange for $1 billion. This is the biggest sum of money that the social network has offered for an acquisition, but analysts claim the 2-year-old photo sharing application is worth every penny.
Mark Zuckerberg is really determined to expand his online dominion as the company is getting ready to sign an incredibly generous deal with the developers of the Instagram application. The app is a photo sharing tool designed to work with Android and iOS based smartphones. There aren’t many things you can do with this application; in fact, its developers have described it as “your iPhone’s Photoshop” because it can modify photos before placing them on social networks.
Analysts have all wondered why Facebook would want to buy Instagram in exchange for $1 billion now that the company will turn public; despite their concern, they were not able to find the exact answer. The best explanation so far is that Zuckerberg has intuited that Instagram might become a powerful rival in the future and decided to keep its enemies closer.
According to Paul Buchheit, the cofounder of FriendFeed, Facebook has many reasons to feel intimidated by the rapidly growing social network. Instagram has managed to gather 30 million users since its launch in January 2011. Facebook, on the other hand is trying to increase revenue from mobile devices, so the acquisition of the photo sharing program might be the solution they were all looking for.
Instagram’s reps declared last week that at the end of 2011 there were 400 million photos, that is, 60 pix per second, uploaded on the mobile social network. The situation could be even better at present as the application was made available on Android-based devices at the beginning of 2012. It was precisely this increasing popularity which made Instagram’s leadership consider the possibility of transforming their application into a fully featured social network. Given these circumstances, Google, Twitter and Facebook showed their interest in acquiring the product, but it was the number 1 social network that offered the best price. The deal will be signed within the first quarter of the year.