Ovum Comment: Why did Facebook pay so much for Instagram?

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11 Απρ 2012 (πριν από 5 χρόνια και 4 μήνες)

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Facebook has paid $1 billion to acquire Instagram. Since its launch in October 2010 on the Apple AppStore, Instagram has proven highly addictive, especially to younger demographics, growing to upwards of 30 million users, and over a billion photos uploaded. Mark Little, principal analyst at Ovum considers why Facebook would want to pay so much for a single mobile app with no revenues? Is the bubble back?

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Ovum Comment: Why did Facebook pay so
much for Instagram?
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April 11, 2012
OVUM COMMENT - Mark Little, Ovum Principal Analyst: Why did Facebook pay so much for
Instagram?

Facebook has paid $1 billion to acquire Instagram. Since its launch in October
2010 on the Apple AppStore, Instagram has proven highly addictive, especially
to younger demographics, growing to upwards of 30 million users, and over a
billion photos uploaded. Mark Little, principal analyst at Ovum considers why
Facebook would want to pay so much for a single mobile app with no revenues?
Is the bubble back?
“The Facebook proposition is becoming fat, allowing sub-propositions like photo-sharing to get
lost or become difficult to access. Currently the usability of Facebook for mobile photo sharing
does not match the experience offered by Instagram and many other apps that are well integrated
with Android and IOS platforms. Facebook needs access to a better photo-sharing user interface
to ensure it remains in control of an important type of shared content and the users that generate
it.
“The positioning of the Facebook brand has also been slowly shifted by its wide popularity, with
many parents and even grandparents of the younger users on the social network. Facebook
needs new attractions to regenerate network effects and to continue to pull the younger
demographic into its orbit.
“The price of $1 billion is certainly inflated in terms of the usual revenue multiples (Instagram has
no revenue) but this will have been driven by Facebook’s main rivals and so the price tag also
has an anti-competitive element driven by the cash piles of Apple (US$100bn), Microsoft
(US$52bn) and Google (US$45bn). Rather than a bubble, these “inflated” prices are perhaps
better described as a temporary market condition centred around a limited number of acquisition
targets perceived as valuable and driven by the cash of four high-rolling Internet giants.”
-ENDS---
Ovum

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