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i think the deal relates to instagram's potential.
Instagram was never bout putting effects on images, that was the gimmick. Instagram was about sharing. It allowed ios users to easilly take pics, change and post to their facebook/twitter (and also instagram), without hassle. That's not an easy task inside ios, so the app got popular taking advantage of a deficiency of ios.
As apple have a good trendy appeal, leaving the app exclusive and only allowing posts from ios they took their share of apple's Glam and became an important social 'thing'.
I guess this express how it grew, and why it is not a photo-fix app. For photo-fix and cool effects, android and ios have a lot better options. ^^
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