Who could, should buy Twitter - and what is Twitter really?
But let’s start what Twitter really is, sharing five things Twitter does really well, but you may not have thought of it (my goal is that at least three were new angles for you):
An amazing feed engine: Twitter veterans know the early growth problems of Twitter, but since a few re-architectures, Twitter has been stable and scaling well to its 300M+ users. It is unique, as it scales to 300M+ feeds (yes Facebook scales to 1B+ feeds, but they are not of the same virality, velocity and volume like twitter posts). The Twitter engine is what many people try to build their next generation apps for – e.g. to monitor things in the IoT world.
A barrier breaker: Information gets filtered, refactored, edited etc. all the time, a traditional way of preparing and consuming information. With Twitter anyone can find an outlet and post tweets to the world, of different quality, but when e.g. an executive at vendor starts to tweet, it often is an insight on where the executives and/or the vendors thinking is at the moment. If it is worth a tweet, it means something for a busy executive. But often not mentioned, it works as a very effective internal communications tool, were an executive can meet internal and external audiences in a quick, lightweight fashion.
The priority inbox: As a heavy Twitter user, I check Twitter often, maybe too often. But it also leads me to check DMs more often than… emails. So the DM has become the priority Inbox. My colleagues even know during covering an event – the best way to reach me is a DM. But it also works as a bypass – some executives have asked and received the best unfiltered feedback about a product, customer, event on DM. And last but not least it works for customer service, too. I have not talked to e.g. a United agent for 2 years, kudos to the Twitter team there that has done all from rebooking, changing flights, changing seats, giving connection information and adding my PRE number (that’s how it all started). So another channel – with some priority.
A note taker: As bad as Twitter is to find people on Twitter where usually Google wins out as most efficient, it works great for atomic note taking. And the search on it is very very powerful. Before going to an event, I look up tweets from last year’s event with a hashtag search. No more efficient way I can think off and have seen. And as an influencer -why should my thoughts, observations and notes not be public right away? Yes, it amounts in lots of tweets, but has proven to be – very valuable.
A survival tool: A lot of my friends and family have gotten Twitter accounts, because they live in … California. And between wildfires and waiting for the ‘big one’ – Twitter is the best safety/survival tool out there. A thin tweet – at sometimes even a text/SMS is visible not only to your followers but the rest of the world. Wishing no one to lay in a ditch or under a collapsed structure – but posting to Facebook is hard and less visible. Instagram and Snapchat are too heavy data wise. On Google+ no one will notice, etc.
There are many assets inside of Twitter that can be of value for an acquirer – but they are all not easy to unlock, leverage.
Who could buy Twitter?
Well, anyone who can afford the lofty premium Twitter wants of course for their existing data and Twitter's potential to have us users create more data.
But let’s start who should NOT buy Twitter
- Enterprise software vendors (this includes rumoured Salesforce): Not a good move, these vendors need to stay on top of digital data to power marketing, sales and service – but social media usage and related data exhaust are fickle – owning one major data source will not allow these vendors to do what they need to: Cross social network sensing, execution and operation of related business functions.
- Big Pipe Companies ( AT&T, Comcast , Verizon, etc.): Not a good move either, unless a very bold transformation strategy, so far not unveiled in the direction of DaaS and advertising. (Unlikely to be the case – so discard). And these vendors are still licking their wounds from them by now almost entirely abandoned datacentre diversification strategy.
- Big Media (networks, Disney etc.): Not a good idea either, though the engagement of Twitter users around live events is very powerful and all these players are losing viewership due to loss of engagement. But 10 per cent of the Twitter price will let these players try all engagement strategies in the universe… so I expect them to spend their dollars there.
The Twitter engine is what many people try to build their next generation apps for – e.g. to monitor things in the IoT world.
So who could buy Twitter?
- Obviously DaaS players, we were just reminded e.g. by Oracle last week that they have 3.5B consumer graphs, adding the Twitter data (which maybe there already) is valuable, and likewise something to monetise. Salesforce and IBM e.g. have access to Twitter, too – the value of the functions. But given Twitter’s price, DaaS vendors would need to monetize the Twitter data – and likely sell them to their competitors. The value of Twitter is to be able to push any related services closer to real-time. Malls still rule the spontaneous purchase – because the consumer was there – but Twitter is an opportunity to move this online.
- Certainly, advertisers, as they can get a real input in regards of what moves a tweeter. But Twitter itself has not figured out to do this – and anyone in the space needs to be careful not to turn off / drive off usage by too much in the face advertisement. So any acquirer in this space better have a way how to solve what Twitter has not been able to solve.
- Social media catch-up players can be interested in Twitter. 300M is not Facebook but a Top5 social media network out there. Compared to e.g. Snapchat, Twitter is more global and more cross generational and more business. Any player who wants to grow here, wants to get into social, could be an acquirer. Google comes to mind immediately.
- A combination player (e.g. Google, Microsoft) that could leverage synergies across multiple fields of existing operations, or form a new offering with Twitter and existing assets. E.g. if it was Google it could not only fuel DaaS for enterprises, add to advertisement, but complement Google+ with Twitter and vice versa – bring more social tools to Twitter from the social toolbox.
It is fascinating to see Twitter grow to its current usage level and still struggle with monetisation, turning to a profit. There are many assets inside of Twitter that can be of value for an acquirer – but they are all not easy to unlock, leverage. To me Google makes the most sense – but not sure if the vendor has the appetite to such a large investment. And Google is working hard to get more into the enterprise – see the announcements from the recent Google Horizons event. Unless I missed some major hitter – everybody else will have some challenges with Twitter – not making this an easy target. So likely Twitter will have to march on - till the investment case gets clearer, another player gets desperate and most likely – Twitter becomes more affordable with a drop in market cap.
So what's your take?Holger Mueller (@holgermu) is vice President and principal analyst of Constellation Research.
This article is reprinted with permission from Constellation Research
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