Zuckerburg was scared that instagram would dominate photosharing on mobile. Photosharing is key to facebook's success. That's why he bought instagram. Nothin

Zuckerburg was scared that instagram would dominate photosharing on mobile. Photosharing is key to facebook's success. That's why he bought instagram. Nothing more nothing less. Monetary Value = how much someone is willing to pay. Facebook was willing to pay $1B, so yes, instagram is worth $1B. Instagram may never produce any significant revenue, it's value is that it's a strategic asset to facebook. Just like the patent purchases they recently made. I think Instagram got pretty lucky with the timing(since we are in a bubble) and the purchaser. Facebook's mobile app is not very good. Facebook should of been more aware of it's competitors and acquired them earlier on. And facebook should of negotiated better. That said if they put the instagram guys to work improving the facebook app it may well end being worth 1B$ in actual revenue. (Though this was clearly primarily strategic, not talent acquisition). Instagram seems like a company designed for acquisition, on it's own it probably could never monetize very well. But it has undeniable strategic value for a company trying to expand or maintain their social and mobile presence.