Why Apple Should Buy Twitter 8 comments
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Michael Arrington at Techcrunch is reporting a rumor that Apple (AAPL) is in talks to buy Twitter for approximately $700 million in cash. The rumor states that Apple optimistically hopes to announce the acquisition at their developers conference in June. Investors need to understand that this is just a rumor; Apple’s precedent suggests that it won’t happen, both parties are mum on the speculation, but I see this as a great opportunity for Apple so I’m going to chime in.
Many analysts have been wondering why Apple continues to hoard their $30 billion in cash and I think the reason is simple - there has been a drought of innovation. There haven’t been any companies worth buying. Twitter, however, is different. The platform is growing 40% per week and is now approaching 25 million users. I began using it on my iPhone a few weeks ago and now find myself checking it multiple times a day. It is so much more efficient to get my news updates through one click at Twitter than it is to surf 50 different news outlets when I’m on the go.
The thing that really excites me about Twitter is the ability to personalize the news in a way that has never been done before. If you’re an NBA fan, you don’t have to rely on ESPN for the inside scoop; now you can follow Shaquille O’Neal or Steve Nash or Kobe Bryant on Twitter. Hear what they have to say about tonight’s game instead of some reporter. If you are an investor you can follow Doug Kass or Jim Cramer or me (eWEATHER) to get regular updates throughout the day. This platform is more efficient than text messaging, more efficient than email, and more efficient than checking the web. I imagine Steve Jobs has had plenty of time to play around with Twitter over the last few months and surely he sees the innovative evolution that Twitter provides.
How does Twitter fit with Apple’s strategy? The pending Apple Media Tablet is rumored to become the first product that can serve as a newspaper/magazine replacement. A 10 inch touchscreen, with built in 3G wireless potentially might become Apple’s best selling product yet. Well, the ideal tool for sorting through the clutter of newspaper/magazine sites on the Web is Twitter. You could argue that Twitter might be more effective on the Media Tablet than Google (GOOG) search. For this reason, this rumor might have legs. An Apple-Twitter offering might be exactly what Steve Jobs has in mind for the new product. DISCLOSURE: LONG AAPL
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This article has 8 comments:
But damn, Apple buying Twitter is not only stupid, it will positively never, ever happen.
I repeat ... APPLE WILL N-O-T BUY TWITTER.
Apple is more capable to build a better Twitter at a fraction of the cost than to waste its money on this fad.
700 million. What the hell are you drinking.
HOWEVER - You're proof of a point I tried to make on appleinsider.com yesterday. Twitter can do the things you point out. And the door is open because RSS has not gained traction.
I know tons of people who waste time hopping from site to site in search of fresh news instead of just setting up RSS feeds in a reader. RSS intimidates them somehow.
Twitter? Like Jason - people have found ways to get the information they want.
To me - Apple would only buy Twitter if the cost per active user made sense. Otherwise they could do it themselves. Further, I don't think Apple would be interested in Twitter in its current state. They'd expand its functions. I don't know how many people use Apple's iChat. I know I don't. But I so use Twitter from time to time. (murphymac)
Anyway - there's potential in what Apple could do with Twitter. But I don't think they need to pay $700 million to get it. Someone should have learned a lesson watching eBay buy Skype.
There's no revenue model.
The iLife Suite supports Mac OS as its position as the "center of the digital lifestyle" computer. They went into pro video (FCP, etc.) and photography because this is critical to their core user base, and they did not want to be dependent on any other company (read Adobe). Furthermore, I think there was the factor that if they were going to invest in photo and video software technology for iLife, they might as well leverage this into professional products that use the same core functions.
MobileMe came out of .Mac, both of which are/were important supporters of the core functions of MacOS and now iPhone. Safari was developed, once again, so to break dependency on other browsers for providing key user functionality. They have moved it to Windows precisely so that they can be assured of being able to deliver the MobileMe experience successfully (i.e. without being sabotaged by MS).
The point is, software & webware are selected for their STRATEGIC importance, not primarily as a profit center.
As for Twitter, I do not see how this would fit into this category. Of course Jobs & Co. have a habit of seeing brilliant connections that are not obvious to us mere mortals (joke). So, while I doubt it, perhaps there really are legs to this rumor. If it is true, however, I am sure that it will be due to some important addition to the key focus than to the reasons given here.
They're in completely different areas of business only loosely tied together by the word "technology".
> Apple is more capable to build a better Twitter at a fraction of
> the cost than to waste its money on this fad.
Exactly! I gave up on Twitter in frustration. It has this absolutely retarded 140-character limit, so everything you write ends up being abbre