Not really sure the demographic of Instagram really cares about anything other than the Instagram app.

Probably more of the power users (brands and celebrities) that uses 3rd party analytics. Instagram is clearly trying to move people to their upcoming Analytics feature.

Yeah completely agree. This makes sense for them to lock it down and offer business incentive. Good on them honestly.

There are no desktop apps for Instagram. Instagram forbids posting photos in any way other than their mobile app. For me this is a big problem.

It's not a problem to the majority use case of using Instagram. Desktop use is declining.

a lot of photographers (amateurs and pro) use instagram, they generally shoot on DSLR and then have to transfer to their laptops and then to their phone in order to upload to Instagram. I know this is not the majority of the users but its still a significant number. There are hacky apps showing up on both Windows and OSX that will do the trick but they are hacky nevertheless.

Instagram's api has always been locked down pretty tightly, not having near the use of 3rd party Twitter apps. This may not have that big of an impact.

Yup, you can't even publish via API on Instagram. On the other hand, Facebook, Twitter and Pinterest allows it.