Prediction: Apple will acquire Instagram

I’m not one for predictive statements, but my gut feel here is too strong not to share. In a nutshell, I believe Apple will have to acquire Instagram, and it won’t come cheaply. I believe this for a few reasons, mainly because Facebook’s forthcoming mobile effort and its integration with Color’s new app. The photo-sharing wars are about to get real, folks. Here’s why…

Everyone knows Instagram is a hit. Built only for the iPhone. High attention to design detail. Three engineers, two community managers. Millions and millions of engaged users. They already capture your location, time stamp, and where you share. Lean startup iteration. Smart, calculated choices. In one year, their version 2.0 re-engineered the camera. That is incredible. I myself was skeptical, wondering how three engineers could rebuild mobile camera software. But, they did. The one kernel that pushed me over the edge was how they enabled image capture at such a high resolution for printing later. Imagine being at an event with hundreds of instragrams being funnelled, sorted, and even printed as events unfold.

This product was built to land in Cupertino. And, Cupertino needs it. Apple has built the premier mobile hardware platform and enabled wonders like Instagram to break free of the noise and soar. Yet the majority of iPhone users simply use the native camera application, and Apple doesn’t really have any social picture of its users. While Apple, in most every case, will happy playing the role of the platform and enabling software developers to innovate in the application layer, the camera presents a very valuable piece of property too rich to ignore. Instagram, so far, presents a great chance to build a different type of social network, one that is both implicit (figuring out whom is near whom, and when) and elastic (that changes over time and location).

Sound familiar? That’s what Color Labs was trying to do earlier this year, though their first app launch bombed, to put things mildly. After that botched entry, Color Labs got real quiet and started on their next build, code named “Blue,” with deep integration into Facebook. Bits and pieces of details about the new app are starting to trickle out, and from what I can tell, it looks amazing. See for yourself in this video. Briefly, the new app, called “Color,” is built entirely on top of your Facebook graph. From your iPhone, you can mimic most of your Facebook experiences through the Color app, mainly taking pictures and commenting on all sorts of activity. In addition to taking and uploading media from the app, you can also dive back in time and retrieve photos — not only your own, but your friends. Welcome to mobile high-res photo stalking! You can also see which of your friends are nearby, as the app collects your location.

Perhaps the most anticipated feature of the new Color is “Visits,” (15-min mark in video) where a mobile user can see if one of their friends is online and sort of “see” what their friends sees through the camera. It sounds jumbled, but basically, Color enables a 1:1 or a 1:many broadcast in real time through the front or back camera, sort of like Facetime except for that the fact that it could eventually be multi-platform and not tethered to WiFi connections. All of these features come together in a way that Color CEO Bill Nyugen was originally ridiculed for but, with this build, may be vindicated by.

Color obviously has access to very interesting technology, so interesting that it had leverage to cooperate with Facebook to build such an app. It’s currently in a private beta exclusively for Harvard students (I know, I know), and will be released once Color feels its ready for the wild again. And while Facebook just wraps up this years successful and dizzying f8, which includes changes largely confined to the “web,” their foray into mobile presents a trickier landscape.

Currently, Facebook has native applications on the major mobile platforms and a decent mobile web presence. But, comparatively, their apps are outdated. Many feel their iPhone app is old and clunky, and they don’t even have an iPad app yet, though I suspect we’ll see one soon. In the next few weeks, Facebook could host another event around its mobile plans, “Spartan,” which could be a plan of attack using HTML5, native applications, or a combination of both. Mobile is tricky for Facebook because they have so many features across so many platforms. Their approach has to be entirely new for mobile, and an app like Color, built right on top using cool technologies, may just be what they’re looking for, at least for iOS.

Specifically on Apple’s platform, then, if the new Color app catches fire, and I think it could, that will put a bit of extra pressure on the folks in Cupertino who have nearly everything figured out, but social remains a black box. And if Facebook has a multi-pronged plan to imprint itself of iOS devices and start to build that more implicit and elastic network, Instagram gives Apple the best chance to combat that threat. With so much activity in the mobile picture-sharing wars, consolidation is inevitable at some point among the winners in the great race to claim this thin edge of the wedge.