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Is Facebook Instagram Deal/Acquisition Justifiable?

Facebook is an internet giant which has been valued at 100 Billion made a hasty decision to buy Instagram at a hefty price. We will see Facebook Instagram app soon available for the mobile users. Facebook IPO is a most awaited event in world’s financial markets.

The real reason for purchase of Instagram by Facebook can be seen in the light of Comscore report as appended below:

ComScore New Mobile Metrix 2.0 Report

  • It shows that U.S. smartphone users have spent 441 minutes per month, or 7 hours and 21 minutes, on Facebook in March 2012.
  • when we compare above data with time spent on Facebook via computer is just 391 minutes, or 6 hours and 31 minutes.
  • Same trend is also echoed in India where more users are accessing Facebook via internet.

Keeping above factors in light Facebook has taken a right decision to buy Instagram as  Comscore report shows an increasing trend of user base to access Facebook from mobile and if the do not tap this segment for monetization; their financial performance and ability to grow revenue would be negatively affected.

Verdict

The speed with which acquisition is a panic reaction seeing the reports from the Comscore. However deal will definitely pay for itself in medium term.

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