TightWind is written by Kyle Baxter. Stay Hungry. Stay Foolish.

Andy Ihnatko explains why Instagram is worth $1 billion to Facebook:

That’s what the people want. Facebook could have kept trying to figure out how to make mobile photo sharing frictionless, fun, and engaging…or they could have simply bought a company that figured it out two years ago. As Steve Jobs used to put it when demonstrating a simple and effective answer: “Boom. Done.”

And it eliminates one of their most threatening competitors.

That all makes sense. Facebook now has a very good way of posting photos, something they never had before, and eliminated a competitor. What’s going to be difficult, though, is how you handle two networks. Mark Zuckerberg and Kevin Systrom have said that Instagram will remain an independent network, but is that really going to be their plan long-term? To manage and develop two services, with separate user accounts and followers?

Probably not. Perhaps the solution is to allow users to use their Facebook account for Instagram, and eventually Instagram-only accounts will decline as a percentage of total users until they are irrelevant. But at that point, keeping “Instagram” as a separate brand and service will be confusing for users and dilute its usefulness for Facebook users and impact for Facebook.