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Instagram grew 78 percent in April, but where does it fit into Facebook’s plans?


There’s one thing that Facebook can boast in the wake of Zynga’s acquisition of Draw Something: Its acquisition of Instagram didn’t result in the app’s death. In fact, Instagram’s performance solidifies its prominence in the camera app market. ComScore has revealed that Instagram has been the top performing Internet property with traffic increasing by a whopping 78 percent between the months of March and April 2012. That’s great an all, but what does Facebook have planned for its acquisition? And what is its underlying motivation?

Note that these comScore figures aren’t a true indicator of Instagram’s performance, as it only takes into consideration the mobile app’s Web presence. While its success would be best measured by the number of downloads and active users, it’s evident that a number of high-profile announcements factored into April’s jump. The long awaited debut of its Android application on April 3 opened the flood gates to an untapped market of Android users. And, of course, the last-minute $1 billion acquisition of Instagram by Facebook likely helped as well.

While April was a significant month, we shouldn’t expect the same dramatic growth in the coming months; Instagram is currently awaiting the Federal Trade Commission’s investigation into a possible anti-trust violation by Facebook. The issue could take up to six months to resolve. More importantly, Facebook’s announcement of its own Instagram competitor, Facebook Camera, could spell trouble for Instagram. Plus, as our readers have indicated, Facebook may not have Instagram’s best interest in mind. Facebook’s focus on its products will remain on its Camera app, while Instagram may be neglected seeing as how it was most likely a user acquisition. 

So where will Facebook’s Instagram users be leveraged? While Instagram has grown its user base to 50 million users, Facebook’s rumored plans to acquire Opera, and its launch of an app store and Messenger app, clues us into Facebook’s motives for Instagram. While we speculated that Facebook’s Camera app launch may have been motivated by its poor NASDAQ opening, which to an extent has merit as a PR stunt, Facebook’s motivations appears to run deeper that.

It’s not hard to realize that the social network is looking to extend some of its core features into mobile apps we’ve discussed before. But here’s where we get speculative. It’s entirely plausible that while Facebook is slowly developing its mobile experience for users with new Facebook branded apps and increasing its brand presence on mobile phones, the company is slowly preparing for its first horizontal integration via the rumored Facebook phone. After Facebook has comfortably developed and grown its core suite of Facebook mobile applications, while at the same time maintaining acquisitions including Instagram, we could expect these apps to be ported over to the Facebook phone, and displayed as Facebook’s native applications. Thanks to Instagram that could mean the potential for 50 million Facebook phone owners. Or there’s always the possibility that Instagram could be enveloped by Facebook Camera, although that may be a stretch.

So if our speculations have a semblance of merit, we’re going to see more mobile app acquisitions by Facebook as part of a calculated move into a horizontal business model. After all, in its current state, Facebook is merely a social network. To achieve Google’s prominence and notoriety, Facebook needs to expand its business and evolve from its standing as just a social network.

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