The mobile photo space is red-hot right now with several players beyond the two mentioned vying to become a common app on smart phones. And one of them, Instagram, was able to gain over a million users in less than three months. So why wasn’t Flickr, with all the resources of Yahoo behind them, able to dominate this space first?

Why did Flickr miss the mobile photo opportunity that Instagram and picplz are pursuing? Yahoo was too cautious about  leveraging Twitters new social graph, allowing Instagram to gain first advantage in the smartphone market. Yahoo which owns Flickr, while growing quickly has become bogged down in corporate decision making while the nimble pass them by.

Back in June, the departure of Kellan Elliott-McCrea from Yahoo would become a big blow to Yahoo. Kellan Elliott played the key role as “Architect”  and was “vital” to the service. Kellan Elliott-McCrea is now the VP of Engineering for Etsy.

The problem now is that Yahoo seems much more interested in “sunsetting” services to reduce costs rather than actually building new things once again. Remember the Social Bookmarking site, Delicious? It’s concerning quite a few in the industry. Where does that leave Flickr?

We’ve heard some unconfirmed whispers of outside parties interested in purchasing the photo-sharing service from Yahoo. Given some of the light Elliot-McCrea just shed on internal workings there, perhaps we can only hope there’s something to those rumors.

Where do you see this going?