Sunday, 29 March 2009

Who should buy Twitter?

Much has been said about potential buyers for Twitter over the last quarter. Names have been dropped online as dead certs, and many different blogs give different reason as to why Corporation X should empty their wallets.

The Motley Fool recently published their take on why Google should buy Twitter. They've even predicted that it'll happen before the end of March 2009. Waaayy back in October 2007, SmoothSpan blog was urging RIM to get in and buy it before it got too expensive.

So, which player do I think has been discounted in all the predictions? Is it the same player to whom Twitter would represent the most value? I think so, and I think it is Microsoft.

Microsoft have poured billions into their online services, and are still a bit player. Almost all of their services have a more popular version elsewhere. The latest incarnation of Microsoft's online services, Microsoft Live is actually quite good, but its usage seems to lag behind competitors (notably Google) in almost every respect (figures are hard to obtain, but Hotmail might still outstrip GMail in numbers of accounts).

Twitter has a problem. No, not that one. Twitters problem isn't that it is overcrowded and the servers keep running out of capacity. Twitters problem isn't actually that it isn't making any money. Twitters problem is that it lies at the bottom of the food chain.

Look at the number of services which have launched since Twitter started, based off Twitter. And not just the client applications or search engines. Applications like twanswers are able to sit higher up in the food chain, and have a great opportunity to make money, but it is Twitter which is spending the money creating the enviroment/platform/ecosystem (delete according to preference) which makes the twanswers service work.

The same goes for Blellow. It provides a useful and simple function - Twitter Groups - helping you sort out the million tweets in your feed. Again, there is great potential for making money, without the expense of running the infrastructure (technical and social) behind it.

So look again at Microsoft. What Microsoft is lacking is critical mass. The apps are fine, the brand is well known, the uptake is rubbish. When was the last time you logged into Live, if ever? If Microsoft buy Twitter, then they are buying millions of Twitter users, and getting them to stick their noses into Microsoft online portfolio.

The traditional argument against Microsoft as a purchaser of Twitter is that Microsoft won't buy it without a plan for profitability. My argument is the complete reverse. Microsoft are the only people who will buy it without a plan for profitability. Twitter is the loss-leader which could kick-start Microsoft's portfolio back into life. Google won't buy it, despite what anyone else says* because they have got a plan for profitability for Twitter. There is only one way to actually monetise Twitter, and that is to inject adverts into your feeds. Google could do that day one. Twitter could do that today as well. The reason that Twitter haven't done that is because that signals the instant death of Twitter. Twitter isn't technically sophisticated. Actually, more or less any script kiddy could put together a Twitter clone in a few hours. If Twitter starts serving up ads in your feeds, someone else will do a better, cooler Twitter and everyone will jump ship in an instant.

Twitter needs to find a buyer, we can all see that. Microsoft are the only player with the financial clout, the need to buy the user-base, and are the only ones who will not destroy the service, but see it for what it is - the new TCP/IP. Twitter is the protocol which transfers data between applications. Ok - so susbsitute 'applications' for 'users', and 'data' for 'ideas' and this makes sense. Twitters future isn't necessarily sending stupid messages to your mates, it is a general communication process, like enterprise busses for the majority. But that is another blog for another day.

* I could look really stupid if you're reading this in the future, and Google have just announced that they've bought Twitter for $100 billion. If they have, stop using Twitter because it is about to become rubbish.

1 comment:

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