Facebook bought the no-revenue, 12-employee, 15-month-old Instagram for $1B yesterday. While on the surface this may appear to be a low-IQ, or perhaps no-IQ acquisition, there is a compelling reason for Facebook to own the photosocial site. 

The App Internet is approaching -- an architecture of powerful applications resident on phones, tablets, PCs, and other devices which seamlessly link to resources in the cloud. iOS and Android applications are primitive forerunners of this world. Over time this approach will become dominant. The Web will become the AM radio of digital.

There are three ecosystems competing for domination of the emerging App Internet market -- Apple (with iOS), Google (with Android), and Amazon (with Fire). Microsoft is a potential fourth player, depending on the quality of Windows 8.

App Internet poses mortal danger for any player that remains too Web-centric. It will enable companies to directly link with their customers -- check out this Forrester report:  Mobile Is The New Face Of Engagement. Despite its good iOS and Android apps, Facebook remains highly Web-focused and has three risks:

1) That a newcomer will build a richer, faster, easier-to-use, more engaging post social network using App Internet.

2) Facebook won't have the skills to play in App Internet.

3) The Apple, Google, Amazon, (and potentially Microsoft) ecosystems become too powerful, blocking Facebook's growth and presence.

Respondents to my one question survey report that 56% of the time they spend on social is wasted. 

My speech at Le Web (Three Social Thunderstorms) continues to stimulate debate. While many do not agree with my analysis, the discussion has challenged conventional wisdom and helped people see alternative futures -- a longtime Forrester value . . . 

Here are six sites that carry interesting rebuttals and threads: Both Sides Of The Table, GigaOM, Fred Wilson’s Sunday Debate, Logic Emotion, Technorati, and Techcrunch. The latter is a video discussion.

A few clarifications that may heighten the dialogue:

1) The Web is dying, not the Internet. The Web is software that we've used since circa 1994 to communicate information over the network called the Internet. Web replaced other software that used to dominate the Internet -- Usenet, Gopher, user groups, etc.. The Internet is alive and well -- it's the software on top that will change.

IT at Forrester is now called Business Technology (BT). The head of BT is the Chief Business Technology Officer (CBTO). Farewell to IT and the CIO.

Big deal -- a few words changed. But did it make a difference?

Yes -- in four simple ways.

1) The job search. In the CBTO job search, we got better candidates than expected. Why? They loved the new title and the focus on business, not just tech. We got high level applicants because CBTO was aspirational.

2) Business focus. We viewed CBTO candidates through a new lens, pushing us to hire high. We were looking for people who had worked to increase revenue, profit, and market share of companies. We wanted someone who understood that a CBTO doesn't serve the business -- they are the business.

3) Regime change. Once the CBTO was hired, he was able to launch a new regime -- IT is dead, now it's time for BT. This enabled him to set new goals for the technology team, redefine the relationship between technology and business, and re-invigorate the people who work in technology at Forrester.

4) A new yardstick. It introduced new standards for technology. Old IT was about uptime. BT is about: agility, speed, being bullet-proof, customer-centricity, and business-centricity. 

Our research has shown that CEOs do not trust their CIOs to innovate or build business process. My direct experience is that changing one letter from "I" to "B" is a good start toward building that trust. Words do matter. Try it.

In January of 2011, Forrester's research showed that tablet owners used the Web far more than apps on their device. Over the last few weeks, visitors to my blog indicated that apps had passed the Web (check out the results at left).

Now this survey was not scientifically significant, but it's another signal that users are shifting away from browsers to apps. Why? Better experience, speed, ease of use. The App Internet approaches.