Facebook is one of the most used websites in the entire world at the moment, with 850 million active monthly users so it might come as a surprise to you that they’ve recently just bought Instagram for a massive $1bn (or just over £600m to us!) although it wasn’t all in cash, most of it the $1bn was made up of shares in the stock exchange. It’s still hard to imagine that amount of money though isn’t it?
Over that last couple of days there has been a lot of people speculating about why Facebook would even bother spending essentially $1bn to buy a site that only (yes, only!) has 30 million users. 30 million users is a lot of people, but in comparison to 850 million active monthly users it doesn’t sound like much. As well as this, the price that Facebook paid for Instagram is a lot more than what Instagram was worth not too long ago. Around a year ago Instagram was valued at just $100m, so the value has dramatically increased over a relatively short period of time. So, now that you know some background information about the sale, let’s take a look why we think Facebook bought Instagram.
At first, you might find it hard to believe that an app that was made just for iPhone users could compete with the giant that Facebook is. However, we really do think that Instagram scared Facebook, a lot! Even though Instagram doesn’t have all of the functionalities that a traditional social networking site has, it’s clear that there was demand for being able to share pictures and so on with your friends without too much hassle. When you think about it, this is why most people use Facebook too, so they can share photos of themselves on holiday, partying with friends and even share some funny photos. So maybe it was a good choice for Facebook to take over Instagram after all!
The co-founder of Instagram, Kevin Systrom recently made a comment saying that Instagram was going to change from just being able to share photos with people. Whether this is true or not, we’ll never know. But either way, it was a clever move to put Facebook under some pressure into making an offer (and a very good one). As well as this, it was clear that Instagram was going to expand even further after they released an app for Android users after news broke out that it got downloaded over 5 million times in less than a week. The next step for Instagram was probably to release a desktop site, but that probably won’t happen now since Facebook have bought it.
There’s no doubt that Facebook is popular on all devices, whether you’re talking about personal computers or mobile phones. However, Facebook have never been lucky enough to experience massive viral growth from the mobile market, while Instagram was the complete opposite. Within a matter of months some of the most famous celebrities such as Rihanna started to use the app on a regular basis. Will Facebook learn from Instagram? Let’s wait and see!
So, what do you think about this £630m sale? Let us know in the comments below.