Less than a year ago, Facebook announced that it bought the tiny 12-person company Instagram for no less than $1,000,000,000 dollars.
They’re about to spend another billion.
The Israel-based app “Waze” is a new mobile application that uses satellite signals from members’ smartphones to generate maps and traffic data, which it then shares with other users, offering real-time traffic info. According to Israel-based business newspaper Calcalist (through TheNextWeb), talks between Waze and Facebook have been ongoing for the last 6 months.
Waze now counts around 45 million users. In March, 1.5 million people downloaded the mobile app, according to Calcalist. If Facebook and Waze hash out a deal, a large portion of Facebook’s 80 million users will probably download the traffic app as well.
Still – though Facebook is currently valued at about $80 billion dollars, will the social media juggernaut really be worth over $1 billion more after the acquisition of this real-time traffic GPS? Where’s the money in that? Sure, it’s going to be helpful and a lot of people will probably really enjoy knowing to take the other route to work when traffic is bad, but…a billion dollars?
The answer is, surprisingly, an overwhelming yes.
The answer is the same one that answered the question, “Why Instagram?” Sure, people could apply some hipster-artsy setting to a picture of a sunset, but every smartphone is already equipped to do that. But here’s the thing – everything is going mobile. That means that in a few years, more people will be using mobile devices to go online than actual computers. Savvy companies will be preparing to accommodate their users going mobile.
Facebook wants to add another user-friendly mobile app to keep their users happy. Why? If Facebook can give their users another reason to stay active on Facebook (users are currently valued at around $100 each: 80 million users x $100 each = $80 billion dollar worth), they’ll be retaining their revenue from ads, apps and traffic.
Facebook’s entire reasoning behind acquiring Waze is to to keep their users happy. Happy users mean more ads, exposure, traffic and ultimately revenue. Instagram accomplished just that, ensuring a simple photo-to-profile platform for users to enjoy; Waze’s interactive GPS system will (Facebook hopes) keep more users happy and keep bringing in the dough.