What Prompted Facebook to Pay $1 Billion for Instagram By Vikas Uttam
Facebook recently announced its purchase of the mobile photo sharing app for a whooping $1 billion creating ripples in the market. While Facebook lovers are ecstatic about the deal, Instagram die-hards communicated mixed emotions. Amid the volatile competition and the war-of-words (between the rival loyalists) the most important question that pops up is "Why did the social media giant Facebook agree to pay $1billion to a company with no revenue?"
We unlock the answers for you in the following part of the article: • It could According to Facebook's S-1 filing the company has oodles of cash. Reports suggest that Facebook has a little less than $4 billion cash on hand, strong reason why it could afford the deal.
• It wanted to stay ahead in competition Facebook did not want any other bidder (presumably Google) to grab Instagram and thus pushed its way into freezing the deal with the retro-ized photo sharing app company.
• It wanted to revamp its mobile apps Instagram as a mobile app is really popular and Facebook mobile apps are not such killers. Apparently Facebook wanted to cash on the mounting popularity of Instagram by integrating it into the company to revamp its own mobile applications.
• It wanted to pump freshness Facebook is a few years old and some reports suggest that it isn't cool anymore. Instagram reportedly had 30 million registered users at the time of the purchase. Facebook wanted to pump the freshness of these users into Facebook and add a fresh appeal to the widely popular social network.
• It wanted to open new avenues for users Traditionally Facebook is used to look at others' photos. And the company desperately wanted to give itself an image makeover. All Facebook users can now use all kinds of cool filters to their Facebook photos and offer the best photo sharing experience. "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," said CEO Mark Zuckerberg.
• It wanted to target users with specific info for mobile ads A food lover will share pictures of food while a swimmer is more inclined to share pictures related to pool and his/her swimming experiences. Instagram was specific about its user information while Facebook lacked those details. Facebook needed the specific user information to strengthen its database and perhaps use it for mobile ads.
• It wanted to get real Over the years Facebook had amassed great wealth and millions of users. Experts suggest that Instagram was allowing users to share real time experiences and Facebook wanted to get real with users. That is one reason why many original Instagram users still can't come to terms with the fact about its sellout.
• It wanted to give users to enjoy the retro experience Instagram was created around the concept of providing a retro experience to users. While Facebook was miles behind Instagram it opted to buy the app maker instead of investing in a rival app. Facebook will be closely monitored by experts and analysts all over the world to see what best it does to its business with brand Instagram, after all it paid a fortune to buy the latter.
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