I'm a student in CS, and I was assuming that all the apps which are delivered for free on appstore (or other markets for android, windows, blackberry) were made by enthusiasm programmers which put their ideas into small apps for free. The thing is that I found that some companies are investing money in free apps.
For example, now I just read an article in which was mentioned that an iphone application just got 10millions of users. Also, on their faq page, it says that they have 4 developers and 500.000$ budget from investors. What makes investors to put their money(big money) into free apps?
ps: The application from my example is instagr[dot]am. See their faq and blog sections.