Are acquisitions good for Twitter?
When a business has a problem, it has two avenues for solving it. It can either build its own solution or it can buy one from someone else. Many young companies opt to build their own solutions, since capital is in short supply.
Twitter is different. Capital hasn’t been a problem during its four years of operation, but the network is plagued with more shortcomings than the company could hope to address on its own.
Twitter could have made some tough calls about where to innovate and where to fall behind. Instead, it took a third path, allowing developers to create solutions in exchange for a chance to piggyback onto the network’s popularity. I’ve argued before that Twitter can’t go on being a piecemeal collection of apps — but with its acquisition of Atebits — the lead story in today’s SmartBrief on Social Media — a new question arises. Should Twitter build its own solutions or buy the developers that have helped keep the network relevant?
At first blush, the better move might be to freeze out the developers and create a robust platform in-house. Twitter is all grown up now, right? They’re going to announce a revenue model, and soon they’ll be raking in the cash. The temptation has to be there to scorn their developers and create in-house versions of all the best apps. I might love that as a consumer, but I think it’d be a mistake for Twitter in the long run.
Twitter’s app community is always going to be more robust and innovative than Twitter on its own could ever be. Rather than trying to compete with its greatest asset, the network needs to make deals with the best developers, possibly even making more acquisitions, so that the network continues to evolve. I think Twitter has come too far with its community to turn its back on them now.
Will buying app developers make Twitter a stronger network? Would Twitter be better off designing its own solutions in-house, rather than partnering with developers? Which solution is more likely to drive innovation?
Image credit, bioraven, via Shutterstock
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Tags: acquisitions, crowdsourcing, developers, social media, twitter
Categories: Editor's Take
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Posted by @amancool5 on April 12th, 2010 at 4:50 pm
Please refer to the charthttp://bit.ly/98sORt
In view of the fact that Twitter is yet to come up with a revenue model of its own, you have correctly raised the question about whether or not to acquire, and which ones, if yes.
Any decision on acquisition has to be made based on the revenue potential of the app and the size of the customer base expected to use it.
In case the app lies in quadrant A or D, Twitter should acquire. There is no point in sharing the revenue with the developer.
In case the app lies in quadrant B, Twitter should collaborate closely with the developer since the customer base expected to use the app is large. Acquiring does not make sense as revenue potential is low.
In case the app lies in quadrant C, Twitter should leave it to the developer. No point in wasting resources.
Aman Sharma
Twitter id : @amancool5
Posted by @GrantGriffiths on April 12th, 2010 at 4:59 pm
What twitter really needs to consider is where have the innovations come from. Where have the ideas come from that have made twitter better over the last 4 years. What companies like twitter need to remember is, what will happen to these innovators and innovations if they start to directly compete with them. Will actions like this squash innovation from outside of twitter itself. And what will this do to the community.
Posted by @sambeal on April 12th, 2010 at 5:19 pm
I think it is time for Twitter to start acquiring the best apps in their ecosystem. The market has voted on the winners that are plugging "holes" in Twitter's product. If they watch from the sidelines too long they risk ending up as a commodity or replaced by a compelling total solution. There is nothing sacred about 140 characters when everyone is using http.
Posted by Michael on April 12th, 2010 at 5:49 pm
The other comments here are quite wise and sensible. I'll just add that in my opinion Twitter has simply crowdsourced the features its users most desire, albeit on the backs of the work of independent developers. But given that Twitter has heretofore been a free service from which many people have benefited in one way or another, I'm inclined to see it as a quid pro quo arrangement, at least until their revenue model comes to light. But I agree most with this statement in the original post:
"Twitter’s app community is always going to be more robust and innovative than Twitter on its own could ever be. Rather than trying to compete with its greatest asset, the network needs to make deals with the best developers, possibly even making more acquisitions, so that the network continues to evolve. I think Twitter has come too far with its community to turn its back on them now."
I would love to see Twitter create incentives for independent developers to create new ways of using their product and extending and enhancing its functionality. If Twitter were to close up and stagnate, its value to its users would likely diminish rapidly.
Posted by Rajeev Ranjan on April 13th, 2010 at 7:25 am
Why people using twitter, reason behind one "Information". Marketer collected the data according to need. many more peoples follow the business deal from here and build the good acqisitions for information.Most of the tools are developed for this informations like tweet deck, friendfollow,buzzom etc.I like buzzom for all features are integrated for information.