Saturday, April 14, 2012

What's an "App?" What's a "Platform?"

Instagram goes on AndroidFacebook knows something about the difference between an app and a platform. You might say a platform is an app with monster traction. And that, apparently, was what Facebook saw in Instagram, a "viral" app that would amass an audience and user base so large it would become a platform.

Instagram raised $50 million at a $500 million valuation in the days after the app launched on Android, after first gaining attention as an iPhone app. Daily average users exploded at that point.

The Android adoption curve and the fundraising apparently suggested  to Mark Zuckerberg and Facebook that Instagram was going to be a well-funded, fast-growing competitor as a mobile platform.

Instagram's ability to become a new platform suggests why mobile apps now have similar business dynamics to traditional media, namely that the business opportunity occurs when content creates a big and engaged audience.

Also, an additional 30 million users, at a time when Facebook is about to become a public company, means placing a valuation on each additional user. At $30 per user, that's a serious bump in value.

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