Apple is going to buy Twitter by the end of next year. And if it doesn’t, I’m going to buy you a beer
I’m not the first person to have wondered: after various failed attempts, what can Apple do in order to take on a larger role in the social networking world?
My answer is: it can buy Twitter. Indeed, I’ll go a step further: if Apple doesn’t buy Twitter in the next 18 months I will offer a beer to anyone who takes part in this bet (if you want to participate, you can find an invitation at the bottom of the article).
Why? Here are 7 good reasons.
1 Apple needs a social network
It’s not a mystery: Apple’s future competitors won’t be HP or Dell, but Google and Facebook. The power of social networks for aggregating (and for directing users towards certain products) grows stronger everyday. Apple is well aware of this and has tried several times to develop along this lines, but without success. iTunes, designed not only to sell, but also to aggregate, achieved the former objective but not the latter. Ping, launched in 2005, started with 1 million user (a meaningless number, since it was a feature of iTunes). Today, 7 years later, I dare anyone to try to find five people they know who use it regularly.
Many respectable analysts claim that Apple’s way in to social media is via integration with existing networks. But there are two problems with this line of thinking. The first is that Google, with the growing use of Google+ (a must for anyone looking to increase the visibility of their website or blog) is unlikely to be all that open to a long-range agreement given the two companies’ direct competition on other well-known fronts. The second has to do with the frequent clashes between Apple and Facebook.
If Apple had its own successful social network and were able to integrate it intelligently and carefully into the core of its systems it would be of undeniably great value to the company.
2 Apple has already begun integrating Twitter into the core of iOS
Over the last year or so Apple has been steadily integrating Twitter into the operating system on all of its devices. Many apps, such as Camera, Safari, Photos and Maps, offer Twitter as the default sharing instrument. Now even Contacts has been integrated.
3 Apple wasn’t able to create a social network, but it could buy one
With a market capitalization of 600 billion dollars and 100 billion in cash, Apple can afford to buy a lot of things. We know that some of this money will go towards buying back stock and paying dividends to stockholders, but 100 billion is an awful lot of money and gives Cook a lot of leeway. Potentially, it could buy Facebook, Pinterest and LinkedIn. But it wouldn’t make sense to do so. It would however make sense to buy Twitter (which given the value of the dividends might accept to sell en bloc in exchange for stock), for the reasons stated above but also because...
4 Twitter is worth a lot, but costs less than you think
Twitter’s market value is estimated at around 9 billion dollars. Over double what LinkedIn was worth before going public. And yet LinkedIn went onto the stock exchange, and Twitter didn’t. Why? One reason is that Twitter is dominated by fakes. Anyone who knows social networks well knows that there are people that manage hundreds (in some cases even thousands) of fake accounts with the goal of generating buzz and traffic to some other site. Wall Street analysts know this too, which could lead the opening quotation being drastically less than Twitter’s estimated value.
5 Unlike Facebook and LinkedIn, Twitter isn’t useful for everyone, unless...
My entire family uses Facebook. All of my colleagues are on LinkedIn. But I am the only one in my family that uses Twitter, and it’s not all that widespread among my colleagues either. The reason is simple: everyone has a obvious reason to use Facebook (for social relations) and LinkedIn (to cultivate their professional career). But Twitter isn’t for everyone. It’s useful for celebrities, for companies, institutions and heavy chatters, but less so to common folk. Twitter is time consuming, much more so than Facebook and LinkedIn.
6 Twitter would bring Apple over 70 million potential customers
It Apple bought Twitter it would change things. With solid integration in iOS devices, Twitter could greatly reduce the spam and become progressively indispensable for users of Apple products (who number over 200 million). Twitter currently counts 149 million users (the official data, but not all real people, as I mentioned above), at least half of whom are using it from a device that is not from Apple.
Some say that if Apple were to acquire Twitter it would be badly received among the social network’s users. But I find it improbable that Twitter users (the real ones, I mean) would leave the platform for this reason.
Therefore by buying Twitter, Apple would acquire over 70 million commercial leads, to each of whom it could potentially sell 100 dollars of hardware.
7 Apple needs something radically new, and it probably won’t come from hardware
Steve Jobs won over millions of users throughout the world thanks to his radical innovations, which always made headlines. He did it with hardware and with software and the integration of the two. But in recent years it’s been above all the hardware that has created the Apple phenomenon. But it’s difficult to imagine that in the next two or three years Tim Cook will be able to wow us with a radically innovative new device. Nevertheless he needs a big move that keeps the buzz and excitement alive. The acquisition of Twitter (in of itself revolutionary for a company that has never made high-visibility acquisitions), would be just the sort of novelty that Tim Cook needs so much.
I’ve set up (on Facebook, with a Mac) an event that will be held on November 6th 2013 in Milan. This will be the day on which, if Apple has not in the meantime bought Twitter, I will be offering a beer to everyone who’s taken part in this bet of mine.