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Why Instagram MRP is $1 billion?


Facebook bought Instagram in $1 billion yesterday and  on same day AOL sold its 800 patents to Microsoft in $1.04 billion  dollar. One application can fetch $1 billion and 800 patents only  $1.04 billion dollar?  A very interesting tweet which was re-tweeted by top tweets also has a very remarkable point.

Now his point has lots of validity however Instagram managed to sell itself in 1 billion dollar. Facebook bought Instagram instead of buying 116 year old New York Times but why? There are many questions which are needed to be answered point by point. First of all let’s define the question.

1. Why Instagram was arrived?

The availability of services like 2G,3G and devices capable of uploading and downloading data extremely fast has given birth to a completely new form of interaction between the user and internet.Earlier it was too much concentrated on text-based real-time interaction. Now it is visual and text based real time interaction,sharing and engagement.This lead to arrival of websites like Pinterest and mobile applications like Instagram.

Facebook also started as a social networking website where people can find the picture of their friend but  later on the internal ecosystem of Facebook became more and more concentrated towards providing services for everything. The era in which Facebook arrived was still not prepared for fully visual based interaction. On the other hand when Instagram arrived in October 2010 as a mobile based application and real-time visual based sharing and interaction. There were large number of internet users who were ready for this sort of interaction because of the capability of the devices and Carriers.

Instagram is a photo sharing mobile application having a full-fledged social networking inside it.

2.What makes Instagram so valuable:

1. It is really easy to click quality picture through Instagram.

2. The effects which are added certainly makes the photograph look-alike a click from a professional photographers. It is not exactly of that quality but for a layman user of lens, it is a great happiness that he can have through clicks like that.

3. A social networking inside the application through which people can follow their friends, family and whom so ever they want. The ecosystem is  open like Twitter.

4. Sixteen million users combined with Apple and Android.

5. Extraordinary brand and mobile application.

6.Has a visible presence on two other major networking websites that is Facebook and Twitter.

7. In cricket it is said that timing matters. In case of Instagram, timing has made it such a valuable property. Pinterest is becoming day by day hottest property on web and it is already third number social networking website in the world and there is not a single other option than Instagram which can compete with Pinterest.

3.Why Facebook bought it?

Facebook bought it because Facebook can’t compete with Pinterest. The main reason is both are social networking sites but the basic platform of Facebook is completely different from Pinterest. Pinterest is completely focused on Photo based networking and it is open like Twitter. The experience which Pinterest will provide to a user is literally not possible on Facebook and Facebook can’t give that kind of experience. Pinterest is a big threat for Facebook in terms of the time a user spends on Facebook. One of the major focus of Facebook is that it is trying to be the focal point of Internet and wants to crush any competition which is coming in front of it. In case Pinterest Facebook is not able to deal with it directly so let’s create a competitor for Pinterest and Instagram was an obvious choice.

You would like To Read Facebook trying to be the Focal point of Internet  and Facebook upgraded the image experience but why?

Buying Instagram is a smart move by Facebook and this must have surprised the industry.

What Benefits Facebook will get from this heavy shopping?

1. Instagram is an ally ,so now they only have to think about Pinterest.

2. Instagram has made a great brand value for itself in Last 552 days. They completely focused on providing user experience instead of  running for financial feasibility.

3. Instagram application has a combined user base of more than fifteen million through Apple and Android devices.

4. Facebook will develop Instagram  on the lines so that it could compete with Pinterest. As Facebook has already declared that they will not integrate it with Facebook instead they will develop it as standalone application.

5. Facebook will also get the opportunity to comprehend and understand real-time behavior of an internet users when they are interacting, clicking, sharing and communicating through Photographs.

Instagram MRP is $1 billion because

1. Its strategic value against Pinterest and as an associate of Facebook. In Business strategic association always comes with a heavy  price.

2. Very strong brand.

3. User base of more than fifteen million and an application which is based on Mobile devices. Users of mobile devices are increasing exponentially.

4. Social networking inside it.

All of the above four points certainly can fetch this extraordinary application a $1 billion MRP tag.

The comparison of Instagram with The New York Times is certainly not Fair. 116 years back New York Times was an innovation in her age and hundred years down the line from now god knows what kind of technology will be available for our coming generation to communicate. The interesting Point is how Google will react to this Shopping.

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