The hype around mobile photo editing and blogging services Instagram has overshadowed Yahoo! Inc. (NASDAQ:YHOO) subsidiary Flickr.com. Instagram hit 3 million mobile users in less than 3 months. One of the biggest reasons why Yahoo! let these two services surpass Flickr on mobile devices is because of “Innovator’s dilemma” according to Kellan Elliott-McCrea. Kellan was a former Architect at Flickr, but now he works as the VP of Engineering at Etsy.

Instagram is a free iPhone application that serves as a photo editor and social sharing tool. When you take a picture, you can change the image properties so it has a different color hue or a different frame. Then you can share the edited image on Facebook, Twitter, Tumblr, Flickr, and Foursquare. If Instagram actually has one million users as of right now, then that means that 500,000 people signed up in 19 days. Not bad considering that Andreessen Horowitz decided to invest in Picplz instead Instagram after evaulation. [Scobleizer]

Picplz is a social photo sharing service that was founded by Imeem founders Dalton Caldwell and Bryan Berg. Picplz has raised $5 million in funding from Andreessen Horowitz. Andreessen will be joining the company board of directors as a result of the funding.