If you name the most noteworthy company in the world today, it is inarguably Facebook. The highly anticipated initial public offering of Facebook is scheduled for May 18, and we all expect it to be a spectacular event. Facebook is to raise $5 billion to $6.3 billion by offering up about 7 to 8 percent of the stocks. It is the biggest IPO in history for an Internet company.
But recently, I had the chance to discuss various aspects of the online revolution with a few people, and as we picked a company that best represents the digital age, we thought of Instagram, not Facebook. Earlier last month, Facebook acquired Instagram for $1 billion in cash and stock. With a few clicks, you can take a photo and apply various digital filters to share it online.
It is the largest acquisition of an online business since Google bought YouTube. Instagram is growing very popular, but is it a good decision to pay $1 billion to buy a company with no revenue? It seems to be a wise decision, whether the Instagram acquisition means a future revenue source or elimination of a potential competitor. Instagram is a service that fits perfectly into the smartphone age, even more so than Facebook, Google or Twitter.
The most notable characteristic of Instagram is that it was developed for the smartphone from the beginning. Facebook, Twitter and various services offered by Google are primarily based on PC platforms, but the world is evolving to “mobile” quickly. While Facebook also offers a mobile version, it is complicated and inconvenient. The advertisement revenue of Facebook in the first quarter dropped by 8 percent compared to the last quarter of 2011. The advertisement profit of Google in the first quarter fell by more than 10 percent compared to the same period last year.
Instagram is a social network service that focuses more on images than text. And most mobile phones today have a built-in camera. People want to share their transient emotions and situations through images. And people increasingly feel repulsed by the surge of messages on Twitter and excessive exposure of personal information on Facebook. In a way, Facebook is old-fashioned compared to Instagram.
Business models not based on the sentiments and habits of the mobile generation will not survive. It is hard to imagine the fall of Google and Facebook now, but many companies’ fates were determined in very short periods of time when they failed to catch up with fast-changing trends.
*The author is an editorial writer of the JoongAng Ilbo.
by Lee Na-ree
But recently, I had the chance to discuss various aspects of the online revolution with a few people, and as we picked a company that best represents the digital age, we thought of Instagram, not Facebook. Earlier last month, Facebook acquired Instagram for $1 billion in cash and stock. With a few clicks, you can take a photo and apply various digital filters to share it online.
It is the largest acquisition of an online business since Google bought YouTube. Instagram is growing very popular, but is it a good decision to pay $1 billion to buy a company with no revenue? It seems to be a wise decision, whether the Instagram acquisition means a future revenue source or elimination of a potential competitor. Instagram is a service that fits perfectly into the smartphone age, even more so than Facebook, Google or Twitter.
The most notable characteristic of Instagram is that it was developed for the smartphone from the beginning. Facebook, Twitter and various services offered by Google are primarily based on PC platforms, but the world is evolving to “mobile” quickly. While Facebook also offers a mobile version, it is complicated and inconvenient. The advertisement revenue of Facebook in the first quarter dropped by 8 percent compared to the last quarter of 2011. The advertisement profit of Google in the first quarter fell by more than 10 percent compared to the same period last year.
Instagram is a social network service that focuses more on images than text. And most mobile phones today have a built-in camera. People want to share their transient emotions and situations through images. And people increasingly feel repulsed by the surge of messages on Twitter and excessive exposure of personal information on Facebook. In a way, Facebook is old-fashioned compared to Instagram.
Business models not based on the sentiments and habits of the mobile generation will not survive. It is hard to imagine the fall of Google and Facebook now, but many companies’ fates were determined in very short periods of time when they failed to catch up with fast-changing trends.
*The author is an editorial writer of the JoongAng Ilbo.
by Lee Na-ree
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