Back in March, Google (NASDAQ:GOOG) (NASDAQ:GOOGL) stated that it would unbundle Google+ Photos and Streams into stand-alone products, casting doubts on the future of its struggling social network. According to a recent report from Bloomberg, Google could unveil the new stand-alone Photos service at its annual developer conference in San Francisco later this month.
The service, which will let users share photos on Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR), is expected to compete against Facebook's Instagram. But it's going to take a lot of effort for Google to close that gap.
Instagram by the numbers
Facebook acquired Instagram back in 2012 for $1 billion. At the time, it had 30 million monthly active users (MAUs).
By the end of 2014, that figure had soared tenfold to 300 million MAUs. Cowen & Co. analysts expect Instagram's annual ad revenue to rise from $700 million this year to $5.8 billion by 2020. The firm pegs Instagram's current market value at $33 billion. By comparison, Twitter finished last quarter with 302 million MAUs and has a current market value of $25 billion.
Instagram is also the fastest-growing social network among online adults, according to a recent Pew Research Center survey. Between 2012 and 2014, the percentage of online adults on Instagram doubled from 13% to 26%. During that time, Facebook usage inched up from 67% to 71%, while Twitter usage rose from 16% to 23%. The study also found that nearly half of all Instagram users use the site daily.
Instagram is also tremendously popular among teens. A Piper Jaffray study last year found that 76% of surveyed students in the U.S. used Instagram, compared to 45% using Facebook and 59% using Twitter.
Why Google is launching a Photos app
Google's unbundling of Photos from Google+ is different from Facebook's purchase of Instagram. Whereas Facebook and Instagram serve two different user bases simultaneously, Google Photos is intended to break away from Google+'s stagnant user base to reach a larger number of users.
This isn't Google's first attempt to enter the Photo storage and sharing market. In 2004, it bought photo management firm Picasa to compete against Flickr, which Yahoo! acquired the following year.
Unfortunately, neither Picasa nor Flickr was prepared for the rise of smartphone photography, which kicked into high gear with the launch of Apple's (NASDAQ:AAPL) iPhone in 2007. Facebook, which was founded in 2004, socialized the photo-taking experience and disrupted Picasa's and Flickr's photo sharing networks. Google+ eventually absorbed Picasa, although Flickr lives on as the preferred community for professional photographers.
Instagram, which arrived in 2010, introduced clever filters that beefed up weaker smartphone cameras and turned everyone into "professional" photographers. As a result, it became a top app for smartphone owners, and a flood of sepia selfies and filtered food pics followed.
Too little, too late...
The problem with Google Photos is that it's arriving far too late in the game. Photo sharing apps that imitate Instagram are a dime a dozen, and niche markets like ephemeral messaging are filled with apps like Snapchat.
To understand how Google intends to expand its Photos app in this saturated market, we should discuss the company's habit of quietly rolling out features to inflate user numbers. Back in 2013, Google claimed that Google+ had 540 million MAUs. But The New York Times reported that half of those users never actually visited the social network; they merely used Google+ linked accounts to access other services like YouTube or Gmail. Other nonsocial Google+ accounts were automatically created when new Android devices were activated.
Last year, Google quietly added an "Auto Backup" feature, which automatically saved mobile photos to Google Drive and prepared them to be shared on Google+. The service also sent emails to remind users to share photos and automatically compiled photos into scrapbooked "Stories" based on location-tracking data. Those features might be helpful to some users, but they also seem creepy, desperate, and intrusive to others.
With the new Photos app, I suspect that Google might do the same: "helpfully" save user photos to Drive, suggest that users share them, then claim all those users as "active" ones, even if they never actively shared their photos with other users.
Considering how poorly Google+ fared against Facebook, I doubt that a stand-alone Photos app will perform much better against Instagram. Google might try to boost its user numbers with automatic features like Auto Backup and Stories, but there's no guarantee that those users won't simply share their photos on Instagram instead.
The big problem with social networking is that users gravitate toward platforms that have the most users. Newer platforms like Google+ and Photos might add new and innovative features, but few people will sign up if their friends aren't there. Therefore, there's a big risk that Google's photo service could end up in the same social graveyard as Orkut, Jaiku, Buzz, and Wave.