Facebook Moves Swiftly to Add Innovation From the Outside

By Chris Preimesberger  |  Posted 2012-04-14 Print this article Print

NEWS ANALYSIS: Facebook, despite its nearly 3,000 employees, apparently doesn't have time or bandwidth to create all the way-cool apps by itself, so it is using its $5 billion IPO line of credit to acquire new ideas.

Let's get this straight: Kodak, which has been in the image business for 100 years, used to be the biggest employer in the city of Rochester, N.Y., and has been a household name for generations, is bankrupt. On the other hand, Instagram, which has been in the image business for 555 days, has no revenue, and employs a mere 13 people, is now worth $1 billion.

Who knew?

Let's chat for a few minutes about three things: 1) Facebook, which bought Instagram last Monday for all that cash; 2) TagTile, Facebook's latest acquisition (on Friday, purchase price unknown, but it probably wasn't $1 billion); and 3) innovation.

So What Did Facebook Buy?

For backgrounders, let's define Instagram and TagTile. 


Instagram is an application that enables an iPhone or Android device user to share photos with friends using a Photoshopped appearance. (Yes, Photoshop, the product name, has become both a verb and adjective.) Users choose a filter to transform the photo's look and feel, then post to the Instagram site, which is easily connected to Facebook and other social networks.


Facebook, despite its nearly 3,000 employees, apparently didn't have time or bandwidth to create this way-cool app itself, so it simply made a deal that we heard took a mere 48 hours to complete.

TagTile, which joined the Facebook team on April 13, is both a cloud application and piece of hardware called the TagTile Cube for businesses. Customers buying an item at a TagTile-affiliated store or restaurant tap their iOS or Android phones on the Cube as they are leaving. Then, should they choose to do so, they can share their enjoyment of the business to their friends with the tap of a button. It therefore follows, naturally, that if the customer is not satisfied, that not-so-good comments also may be networked out to the world.


Merchants, meanwhile, receive this valuable information, store it, can analyze it, can track their customer bases and send custom offers directly to their phones. Or they can send makeup offers, if the customer experience was not optimal.


So this is what Facebook is doing in the days leading up to what likely will become the largest initial public offering of stock in business history--an IPO worth some $5 billion. The brash social networking company has now resorted to buying good ideas. 

Nobody is saying this is bad. In fact, this is the way most of the big players in IT now are moving. Technology advancement moves so fast, is so pervasive and so fickle, that companies that do not look to the outside for good ideas undoubtedly will be bypassed by competitors at some point.


Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel