The motivation behind Facebook’s Instagram buy

John Moe Apr 10, 2012

Jeremy Hobson: Facebook is making its biggest purchase yet as it prepares to go public. The company is buying the photo-sharing app Instagram for a billion dollars.

Marketplace Tech Report host John Moe joins us now live to discuss. Hi John.

John Moe: Good morning.

Hobson: So Facebook is about to spend a  billion dollars on a company with no revenue — what’s this all about?

Moe: It’s all about pictures, and the funky, artsy filters put on those pictures. Instagram is all about sharing photos over smartphones; putting them on social networks — like Facebook’s, or Instagram’s own network. And it’s incredibly popular; growing so fast. Over 30 million users on iPhone alone, and it just moved over to Android phones as well, and yeah — it’s free. It’s taken the philosophy of “get the users now, get the revenue later.”

Hobson: Now I went to Instagram’s website this morning and found that they don’t even really have one. They just have sort of a link to download the app for your smartphone. Which makes me wonder — how much of this is just about mobile for Facebook?

Moe: It is all about mobile. This is when Facebook has tried to really get its footing in mobile; this is almost an admission that Facebook hasn’t really done very well with mobile so far — it’s a website. And Instagram, growing like crazy — people love it. And the question now is whether people will love it now that it’s owned by Facebook. It’s worth noting that both companies say Instagram will keep its own identity.

Hobson: And John, finally, how much does this have to do with Facebook going public? This is just about to happen.

Moe: Yeah, Facebook needs to show that it has the future of social covered, and that future involves photos and smartphones. You know, when you look at the future of where the web is going — social and photos and mobile.

Hobson: John Moe of Marketplace Tech Report, thanks a lot.

Moe: Thanks Jeremy.

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