They say a picture is worth a thousand words, so let’s start by looking at how pictures can be worth a billion dollars…
Picture Of Health?
This week saw Facebook release an important update to Instagram, the photo app that it paid close to $1 billion dollars for shortly before its IPO last year (70% of the deal was in stock, so there’s no knowing what the deal will end up costing Facebook). The update allows people to tag themselves, friends and even brands in the pictures they take.
Whilst Mark Zuckerberg has said that they have no immediate plans to start monetising Instagram, it’s not hard to see how tagging could be the first step on the road to making back some of the hundreds of millions of dollars that they paid for it. Tags in photos were what really turbo-charged Facebook’s growth, and, as I said a year ago, could do the same for Instagram, whilst the fact that it will also be possible to tags brands opens up obvious monetisation options.
That said, it’s worth noting that it only took a couple of days for articles to pop up telling people how to remove tags which may make things a little harder.
In other Facebook news, the social network had its latest earnings call. Depending on whose PR you read, the results were either OK, great or terrible. In reality, they were probably a little of each.
Revenue was up, though possibly not by as much as some people would have liked. Revenue from games was the highest its ever been, though Zynga appears to be losing its attraction, with its contribution towards Facebook’s revenue down (something Facebook is probably glad about as it used to be dangerously reliant on Zynga.)
In terms of advertising, mobile now accounts for about 30% of ad revenue; this is growing, which is good, but may not be growing fast enough to replace revenue from desktop traffic as it isn’t currently as valuable to Facebook.
Seeds Of Growth?
Last week I highlighted the change in Apple’s recent fortunes that noted that it might well still turn out a major new product, and so it has turned out. To fund its major dividend it is selling its own debt (the iBond?) rather than repatriating the cash it has sitting outside the US, as this would cost it a lot of money in tax.
Having quietened down its major critics, the tech world is hoping that Apple will get back to releasing market defining products, though it seems more likely that Apple will instead bring out the iPod Mini to the iPhone’s iPod, by releasing a lower priced, mass market model. It seems that those waiting for Apple’s Smart TV or internet enabled watch will have to keep waiting.