Regarding the Facebook acquisition of Instagram, bad move vs. brilliant?
I keep thinking that everyone, including the media at large is missing the significance and the full value of the Instagram acquisition.
It's not photos perse or the process of including the photos into Facebook, it's the data that the photos have captive. And to that end it isn't just digital photos. It is digital photos that are taken from a mobile device platform, i.e. specifically a phone or iPad with carrier service (NYSE:GPS). Specifically from the 30 Million (iPhone) Users which probably fit pretty neatly in the treasured demographic of youth.
Coming from where I have been the last few years (classified), digital photos have very interesting characteristics and attributes. For instance, most people don't know that when you take a picture it also includes latitude/longitude (GPS Coordinate) and a time stamp, unless you turn off the location feature on your smart phone's photo apps.
In addition, it is often a picture of a person, face, object and or structure in the context of a background which is subject to algorithmic analysis and identification.
In my view these photos are even more valuable than tweets as they carry product information, mood (facial expressions and context which signify satisfaction or dissatisfaction) along with time and location.
Even if you turn off latitude/longitude gps feature that photo's characteristics can be compared to other similar photos with similar attributes and linked to photos that do have location and time stamps.
Algorithmic development doesn't rely on hardware refreshes and you can increase performance 400 times or more in as little time as a month. Which means that your database of stored digital geo-referenced photos are the gift that keeps on giving, as long as your algorithms keep getting better and more efficient. It is a datastore of enormous value.
There are already several applications on the market where random people can upload random photos and these photos are organized and stitched together to create near real time virtual perspectives that are geographically and time referenced.
I think that this much overlooked aspect is a really big part of the attraction that Zuckerberg had to Instagram and it was perhaps more about how Instagram organized this data, stored it and or had a way to leverage it, than just to get an app that took pictures into Facebook.
This is where Facebook had to have seen the greatest value. And once it went to the Android platform and he saw the take up it got enormously valuable to him, i.e. worth a billion. A dollar a photo? Why you ask? Well think of all the captured information within those photos that can be monetized.
When you think about it Zuckerberg needed it to compete with Google (Android/Search) and Apple (iphone/iCloud) it was a way he could get in the game without having to invest heavily in developing a phone platform.
Incorporating Instagram into facebook gives him a big edge over android/iphone as they are separate but equal rich data photo pools. With Instagram working across both platforms he has a representative bigger piece of the pie, i.e. geo-referenced time photos than either of them.
Was it worth $1 Billion Dollars, maybe not but now you could see how he might have thought it was a great deal and had to have it.
It might worth that much and more just on the database he captured, if they are able to monetize it and many times that if people still are attracted to taking pictures on with Instagram and keep their location services on.
I don't know that any other platform exists out there with Instagram's unique attributes. All of the other photosharing sites miss out on the fun mainly because the tool used to get the pictures into them are digital cameras, and don't have the location information which make the photos not as valuable.
My three cents.
Remember don't take any pictures with location services, turned on:) Unless you want or need to be found. Keep in mind it could be a great safety feature...
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.