This week saw the surprise $1bn acquisition of hipsterlicious photo-sharing app Instagram by Facebook, making overnight multimillionaires of its 13 employees. Facebook is no stranger to picking up small businesses here and there, largely for talent acquisition, but this is clearly bigger than hoovering up a few more skilled coders.
In a quiet period after F8 last year, Facebook mentioned that the majority of its formidable software engineers will be working on mobile (tablets included), and for good reason: smartphone ownership is already at about 50% in developed nations, and growing phone ownership in MENA/BRIC is skipping out the PC middleman entirely. In Kenya, for instance, over a third of the population use mobile banking.
In other words, the world is going mobile, and Facebook needs to keep up. In this context, it becomes clear that the Instagram buy is a move to make sure the world's biggest social network stays relevant on the screens of iPhones everywhere.
But why photos? As a veteran digital marketer, I know that photos make up some of the most engaging content on the web. People love photography, all sorts of photography - baby photos, travel photos, beautiful landscapes and candid snaps of friends. Photos garner magnitudes more comments, shares and likes. We've witnessed the rise of Pinterest, and it's no coincidence that Facebook's new Timeline format is so much more visual.
Photos are more socially important than ever when everybody has an internet-connected camera in their pocket. Yet Facebook's phone app wasn't really the best platform for taking mobile photos on. It wasn't even necessarily the best platform for sharing them on, and that's a big problem when you're a social network.
Facebook knew this. Instagram is an undiluted, single-purpose app that does its job extremely well, and it was eating Facebook's lunch. Post-acquisition, Zuckerberg's public note shows that Facebook will be keeping the two products separate so that Instagram can do its thing without getting lost in the noise. Instead, the big blue will be carefully baking in Instagram to its platform, which should provide the best of both worlds - not to mention a boost in traffic.
In term of what users will actually see, a little bit of Instagram functionality might find its way into Facebook, and vice versa. And that'll be nice for creative campaigns and further viral uplift. But the real significance is that Facebook should now be feeling much more comfortable about its mobile strength. As the world prepares to leave the desktop behind, its biggest social network is prepared.