The next billion dollar App?

The move to snap up Instagram this week by Facebook for a cool $1 billion came out of left field for many people.  The same question will be asked in boardrooms up and down the internet - "Why them?".  Instagram, formed just 18 months ago, is a digital photo editing and sharing app, built initially for IOS devices (iPhone and iPads).  They employed 13 people and their sole product was designed to make pictures look like they came from a Instamatic or Polaroid camera.  Retro has never been so cool.

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The Instagram app,  which is still top of the free downloads in iTunes, has been an unparalleled success.  It reached one million downloads within two months of release, five million within nine months, ten million within a year and now has over thirty million downloads.  It has had a helping hand along the way.  Whilst we may cringe when we hear his name, having Justin Bieber endorse your product is enough to send anything into hyperspace which is exactly what happened with Instagram.

So $1billion for a company that makes a product that it then gives away is quite an "interesting" business model.  Whilst we all know that the likes of Facebook, Google and Apple have deep pockets and are pursuing a strategy to own our desktop activity as well as our mobile life, it is hard to understand who the next "big thing" will be?
Many people believe it will be Pinterest, again another photo-sharing site but with a different take on it, using the concept of Pin Boards to collate different images on the same subjects (and collaborators) together.  Again this is a free application to use, and again it has grown at a phenomenal rate.  Launched just over a year ago it can boast the fastest number of users for any social network in history and within 9 months it had nearly 12million users, growing at 11.7% per month.  Yet again, it has no real revenue stream.

The programme is free to use, the app for IOS is free to download so it is hard to see where the value can come from an acquisition, but mark my words, an offer will come, and will come soon from one of the big boys.  In my view it is likely to come from Google.  The reason why?  Well on criticism levelled at Pinterest is that it "encourages" the use of copyrighted material.  It is a very simple application to use - set up a Pin board on your favourite subject (such as my one on my football club, Lewes FC, here) and then when you come across a relevant image on the web, simply "Pin" it by adding the url of the image.  People can then "follow" your boards and also add items to it.  So any copyrighted material can be added by simply cutting and pasting a URL.

However, here is the issue.  All users agree that by "pinning" images on Pinterest "all personal, creative and intellectual property posted to the site belonged to the website and could be sold".  So essentially they could sell the copyright to someone elses copyrighted images.  A legal minefield.

The only other app I have seen or used that could be of interest is Snapseed.  Again it is another photo app for the iPhone and iPad but one that makes your photos sexy and not dull and washed out as if they had faded in the light.  It can produce some stunning effects as you can see from the picture of the East End of London to the left (as well as a further gallery here), is simple to use and of course does not have the same copyright issues that Pinterest has.  Oh, and it was voted iPad App of the Year for 2011 which is no mean feat.
They also have a revenue stream as this is a paid for app.  You can download it for £2.99 from iTunes or buy the desktop version for $19.99.  So all of a sudden you have one of the must have bits of software which has a revenue line.  Developers NikSoftware originally developed the application for the high end professional users but soon saw the power of making it into an app for mobile devices and have never looked back.

So look no further than this application for your next big deal.  It could be today, it could be tomorrow, but mark my words, Snapseed is going to be huge.

Written by Stuart Fuller, Director of Communications Group NBT
NetNames is a part of Group NBT Limited

13 April 2012