Instagram’s jaw-dropping $1 billion price tag became a lot more understandable with the release of Facebook Camera for iOS. The app which was in development before the social network made its offer to buy Instagram about six weeks ago gives us a glimpse at how Facebook was planning to compete against the young mobile-first startup. It also showcases just how important Instagram is to Facebook’s future. Instagram’s Success Was Not a Fluke! When Facebook purchased Instagram back in April, I believed the service was worth every penny (even while pleading with Facebook not to ruin the Instagram experience).

After the release of Facebook Camera, I’m even more convinced that Instagram could be Facebook’s YouTube in other words, an acquisition that becomes monumentally important to it future, and helps it solve a problem it couldn’t solve on its own (like Google Video before Google bought YouTube.) Facebook Camera isn’t a bad application it just isn’t good enough to compete with Instagram. After installing Facebook Camera and using it for a few minutes, I couldn’t help but think “Facebook was going to fight Instagram with this?” Elements of the user interface are reminiscent of Path, the last iteration of Gowalla (before it’s founders left for Facebook and the app was shutdown) and even the latest Google+ iPhone update. It’s not unattractive. Having said that, the app is an Instagram clone and a second-rate one at that.

The user controls for taking photos and applying filters could use some serious love. Facebook’s filters are awful. Instagram can be criticized for over-reliance on the toy camera aesthetic, but at least its filters actually make your photograph look demonstrably different. The filters in Facebook Camera are really more like white-balance settings, and poor ones at that. It’s unlikely that Facebook Camera could have taken much momentum away from Instagram. It’s true that the Camera app is infinitely better than the photo functionality built into Facebook for iOS but that’s not saying much. Facebook Needs Strong Mobile Leadership. In it S-1 filings and during its IPO roadshow, Facebook continued to reiterate the role that mobile plays in the company’s future roadmap. As soon as the dust from the IPO settles, CEO Mark Zuckerberg has vowed to focus on fixing its mobiles apps. Facebook is not a small company. It employs thousands of talented engineers and product managers. From the outside, it looks like the company could benefit from some strong oversight on its various mobile initiatives.

If Facebook is going to achieve mobile dominance, it needs to have a Steve Jobs-like clear vision. That means recognizing whether or not it makes sense to release an also-ran photo app when you just spent $1 billion buying the competition. Some argue that the hard work that went into Facebook Camera necessitates its release. I disagree. If Facebook is concerned about losing ground in the mobile photo space, releasing a knock-off standalone app isn’t going to do it any favors. If anything, the company would have been better off simply integrating the truly excellent photo-only browse mode into the main Facebook app in other words, improving the main show first. Despite my kvetching, and the seemingly unfocused mobile strategy taking place at Facebook HQ, I still believe that mobile photos can be a big opportunity for the service.

The one feature of Facebook Camera I like is the ability to browse through a photo-only feed from my friends. For me, the best part of Instagram has been using the app to catch up on what my friends are doing, and to see their lives in a more interesting context. Facebook Camera brings that same functionality, but it focuses on the Facebook network. Even better, because the app pulls in photos posted using the Facebook Social Graph API, it’s not just Facebook photos that appear in the stream it’s photos posted to Facebook from other apps. That means I see photos from Foodspotting, Camera and more often than not, Instagram within the Facebook Camera app. This type of broad integration was something that Instagram was in the process of adding. In March, it opened up its publish-to API to other app developers.

But Facebook already has APIs locked and loaded. Now, just imagine what would happen if Instagram users had the option to view the entire photo feed of their Facebook friends (or just those that they follow on Instagram) inside the best photo sharing app for mobile. Rather than trying to create a clone of an existing product, Facebook should focus on how to bring its core strengths namely the size of its network and app developer base to its existing products. ( By Christina Warren from )