By on April 17, 2012

Instagram, the popular photo sharing service, was bought by Facebook for $1 billion, despite not producing any tangible goods or generating revenue. Ducati is all but set to be purchased by Volkswagen for $1.12 billion, while producing tens of thousands of premium motorcycles sold across the globe ad fielding one of the most prestigious brands in the transportation industry.

Ducati has long been the apple of VWs eye – more specifically, VW boss and Ducati owner Ferdinand Piech has long coveted Ducati as a rival to BMW Motorrad. Analysts say there is very little synergy between VW and Ducati, but the purchase makes sense in light of VWs habit of buying luxury brands at cut rate prices. Or Piech is just a profligate mad man. I’m not sure.

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31 Comments on “Ducati Worth Slightly More Than Instagram...”


  • avatar
    dima

    No surprise here. We are in .COM 2 bubble. Facebook is a king. Just wait few years and everything will be back to normal until Wall Street finds some new thing to sell.

  • avatar
    stuntmonkey

    Maybe VW could help Ducati with aluminum frames…

    • 0 avatar
      YellowDuck

      Not likely. Ducati frames are steel trellis. Okay, recently they started adding some Al subframe castings and such, but the steel trellis frame is as much a Ducati symbol as is desmo valve actuation.

      • 0 avatar
        CRConrad

        But they could weld frames out of aluminium pipe that would look just exactly like the ones welded out of steel pipe, couldn’t they? (OK, except possibly that welding seams in aluminium tend to look a little fatter than in steel. But I don’t think most people would notice, nor that it should disturb the few who do overmuch.)

    • 0 avatar
      johnny ro

      I hope VAG does not make then change over, the welded steel pipe frame is a thing of beauty. My SV650 monster copy has aluminum and the monster is prettier.

      • 0 avatar
        stuntmonkey

        Steel trellis frames are actually a good fit for a small company, they’re light and economical to do in low quantities, so it makes sense to keep doing it for roadbikes. But for various reasons, lack of experience with aluminum spar frames being one of them, they’re dying on their feet in MotoGp. The whole Valentino Rossi era at Ducacti is tarnishing the brand in a very public way. And unlike a luxury brand like Rolls Royce, a performance brand like Ducati lives and breathes of race success. That used to be true of Porsche, but they had time to morph into a BMW/Jaguar competitor. Ducati doesn’t have that luxury.

  • avatar
    dima

    No surprise here. We are in .COM 2 bubble. Facebook is a king. Just wait few ears and everything will be back to normal until Wall Street finds some new thing to sell.

  • avatar
    jaje

    I think the FB purchase of instagram was for IP rather than their non money generating business model.

    • 0 avatar
      psarhjinian

      Instagram was a threat to Facebook, or a threat should it become part of a Facebook’s the G+ or Twitter.

      A lot of FB’s traffic is based on “This is what I am doing now” and Instagram allowed a simple way to do that. Get enough people using that and/or leverage a competing service, then build an ecosystem atop that, and suddenly people have a reason to use something that’s not Facebook.

      It’s to their advantage to ensure their users don’t leave their ecosystem.

      • 0 avatar
        sportyaccordy

        How was Instagram a threat to Facebook? Facebook makes money, Instagram doesn’t. Where’s the threat?

      • 0 avatar
        imag

        sporty – the biggest threat to Facebook is that it becomes like MySpace or AOL – abandoned in favor of a new platform. Facebook’s primary goal now is to watch out for anything that could be the next Facebook and buy it before it becomes a threat. If the users migrate, they are done, regardless of whether the competitor starts out charging for their services.

  • avatar
    Darkhorse

    I cannot comprehend why VW would want to do this. They are a CAR company for God’s sake.

    Piech has an ego problem and it will wreck VW group.

  • avatar

    Reuters is now saying that it’s official, VAG has purchased Ducati. I’m not quite sure how to feel about this as a motorcycle enthusiast. On one hand, German (VAG even) ownership hasn’t worked out too badly for Lamborghini. On the other hand, Ducati seems to be a far more passion-driven enterprise than Lamborghini. I hope the Germans don’t shove the passion aside in the name of bottom-line profits. I’m having nightmares of AMF-owned Harley-Davidson…..

    • 0 avatar
      burgersandbeer

      I think Germans do well enough as stewards of foreign brands. At least BMW has been careful with MINI and Rolls Royce. It wasn’t very profitable for BMW, but I think the Land Rover brand did OK under their watch as well. As you said, Lambo has been fine under VAG’s watch.

      Daimler’s ownership/partnership/whatever it was with Chrysler was a disaster, but I’m not sure you can blame that on brand mismanagement. I can’t think of any other negative examples off the top of my head.

    • 0 avatar
      sportyaccordy

      I think Ducati will be fine. VAG manages their brands pretty well, and Ducati is pretty profitable as is. I do hope VAG just provides cash and requested technical know how. That’s really all Ducati needs.

  • avatar
    jpolicke

    I fail to see what the purchase brings to either party. Perhaps Ducati needs some deeper pockets to finance R&D but what’s in it for VW? Is it just to fill in that empty space in the Piech family collection, so they can claim to be involved in all wheeled vehicles from motorcycles to earth-moving equipment? Graco better watch out – VW doesn’t yet have a presence in the baby stroller market.

  • avatar
    sfbiker

    Lots of car companies have motorcycle divisions, or at least make both cars and motorcycles: BMW, Honda, Suzuki — Fuji is partnered with Polaris, though doesn’t own them. I think it can work out OK.

    VAG has done a fine job of allowing for brand identity within its group, and poured money into brands that can’t possibly be profitable — hello? Bugatti? — but I wonder if maybe Fiat wouldn’t have been the better suitor.

    Motorcycles are a lower-margin product than cars, but buying a luxury brand means you get the value of the trademark as well, and product-development in motorcycles is not as long or as complex as it is for cars. Harley financed its way back from AMF oblivion by licensing the logo and selling HD swag, then poured that money back into the manufacturing facility and product development. And then they marketed the bikes to dentists rather than to reprobates and turned the company into a profitable enterprise. You could do the same with Ducati: Ducati-branded riding gear, Ducati-branded helmets and boots, and an expanded motorcycle lineup to compete with BMW Motorrad on all fronts would make sense. Buy it for a billion, expand the dealer network and the product lineup while licensing the brand and you have a bigger company with bigger market share in maybe five years. Ducati also appeals to a younger rider than Harley, and BMW has been targeting that demographic as well.

    • 0 avatar
      hubcap

      “…but I wonder if maybe Fiat wouldn’t have been the better suitor.”

      Fiat has its own cash flow problems. A Ducati under Fiat ownership would be fighting for table scraps and I fear would not come out on the winning end.

      VAG offers stability. Now that Ducati can catch its breath, I’ll be looking for interesting product out of Bologna.

    • 0 avatar
      Robert Gordon

      “Motorcycles are a lower-margin product than cars”

      How do you figure that? In $/unit yes I agree but that’s because they’re cheaper. In percentage terms a bike is way more profitable.

  • avatar
    tekdemon

    Pretty sure that Ducati also loses a hell of a lot more money than instagram does. And since when do products have to be physical for them to be valuable? Was Microsoft a joke too because they made software? How is being a software company not producing something of value, and for that matter how is an overpriced luxury motorcycle brand more useful to anybody than photography software? I don’t think Instagram is really worth a billion dollars, but then again it’s probably more useful to the world than luxury-priced motorcycles.
    And anyways, they paid a bajillion dollars for instagram because unlike Ducati, Instagram has millions upon millions of customers.

    • 0 avatar
      tresmonos

      If you look at the entire supply chain, even a small manufacturer employs and generates more revenue than a small software corporation like Instagram.

      But you do provide sad and true points: more and more youth prefer to stay in and socialize via the web. Instagram has become part of that culture. So in a sense, Instagram spends the money of the generation that actually earns the their revenue, not the ones that give it worth. I always wondered how the gen Y’ers would impact the plant I worked at, but they impressed me with their work ethic so all is not doom and gloom.

  • avatar
    early

    I was hoping someone would buy Ducati that would give me confidence in owning one, but vw/audi…

    I don’t think its fair to get down on instagram and the younger generation because of the price the company sold for. Sure they don’t make motorcycles but instagram is a phone app, its not something you stay at home and use, its not a video game. Instagram got something like 10 million new users in 2 weeks when it became available on Android, I think Facebook was running scared to a point. Instagram is probably one of the most popular social apps there is.

    BTW instagram is the perfect place to show off your Ducati to your friends, I have a picture of my Honda on it.


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