The purchase of instagram was a pre-IPO move to prop up Facebooks offering as a mobile company before their core product had actually transitioned. Investors major question was if FB could transition from desktop to mobile at the time, and Mark needed something to back that up. Mark had been quite vocal about Facebooks guesses around mobile, html5, apps and how he needed to reorganize the product teams but couldn't get the story together in time. Thus instagram.

The logic in both the article and most of the comments seems to utterly forget the context of which FB was in at the time.