"There are hundreds of thousands of apps. Apps are not a matter of 'build it and they will come," says Rebecca Lieb, an analyst with the Altimeter Group. "The price tag indicates that Instagram was not without other suitors."
In other words, Facebook didn't just buy any company.
"If someone could bottle their recipe for success, I guarantee they would. It's easy to use, works extremely well and adds an extra layer of functionality (with the filters)," Lieb says. "All of that combines to create the mojo that is the brand. Why isn't every soft drink Coca-Cola? Because it isn't."
Instagram's overnight success is reminiscent of another sleek, easy-to-use application that's gotten a lot of users quickly — Pinterest. Both companies tap into people's desire to share little life moments as they happen. And both give users a social network that is simpler and less noisy than Facebook.
"There are a lot of interesting social networks out there," says Gartner analyst Brian Blau. "And those are competitors to Facebook. One around photographs, (that's) one of the most popular things we do. It's a perfect complement to Facebook."
Facebook's challenge will be to keep loyal Instagram users happy even as the service expands to include many more people.
"We have seen this happen before when Facebook opened up its membership base from (college students) to everyone," Lieb says.
People grumbled at the time that this was the end of Facebook. It wasn't.
"People don't like change, but user behavior indicates that people will accept change," she says.
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