Yesterday was a big day for small fish getting big paychecks. OK, it’s not entirely fair to think of AOL as a small fish, but there it is. Microsoft paid a hefty premium for a pile of AOL patents, and the New York Times deciphers the sale:
Microsoft has used its deep stockpile of computing patents to prod smartphone makers to pay it licensing fees. So, analysts say, adding more patents promises to strengthen its negotiating and legal position with rivals like Google and Apple — and handset makers using Google’s Android software including HTC, Samsung and LG.
So it’s a defensive move, and gives Redmond a big legal club to swing. It seemingly has nothing to do with innovation or bringing new products to the marketplace. Meanwhile, Facebook yesterday decided to snap up Instagram, the photo sharing startup with a handful of employees and a popular mobile app for iOS and Android. Instagram has 30 million users, over a billion photos, but no revenue stream. Why the hefty price? Om Malik on GigaOM:
…if there was any competitor that could give Zuckerberg heartburn, it was Systrom’s posse. They are growing like mad on mobile, and Facebook’s mobile platform (including its app) is mediocre at best. Why? Facebook is not a mobile-first company and they don’t think from the mobile-first perspective. Facebook’s internal ideology is that of a desktop-centric Internet company.
The Facebook mobile offerings do strike me as lackluster, and the consumer rush away from traditional desktop systems for their social networking needs is the cause for Facebook’s concern. Instagram users are passionate about that platform, but I can’t say I meet many people who have that same fever for Facebook these days. I could certainly see Instagram rising as the natural Facebook alternative in the coming years, and Zuckerberg wants to keep those switchers in his tent. It will be interesting to see if Facebook will stick with the claim that they will keep the two entities separate from each other, and not roll one into the other.