Apple Thinking Differently on Twitter
Rajesh is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The Cupertino based software and hardware developer seems to have abundant money to explore various avenues. With $117 billion of liquid assets, Apple (NASDAQ: AAPL) seems to be working out ways to get its social media exposure into place. The New York Times reported last Friday that there have been talks between Apple and Twitter regarding Apple considering to make a strategic investment in the hundreds of millions of dollars into Twitter which recently raised about $1 billion in funding.
Talks regarding product integration matured during a time when Apple’s relation with partner Facebook (NASDAQ: FB) started wobbling. By developing a relation with Twitter, the computer giant aims to establish its foothold in the social media space. However, whether or not the deal will take place is uncertain, as the discussion regarding buying a stake in Twitter is in the early stages and no negotiations have been made as yet. The two are not in any discussions at the moment and the reason remains unclear. Both Apple and Twitter are keeping quiet on the matter. Also Twitter is in no hurry in seeking more funding as they already have "truckloads" of cash. These developments have not yet been made public.
There is an ongoing war in the social networking arena and Apple needs to gear up to enter the race. The company’s social media experience has not been that exciting and the effort that it put in Ping wasn’t rewarding. Though Apple may have mastered the smartphone and tablet market, its profile in social networking needs to buck up. Social media is gaining popularity and Apple is sensing it. As pointed out by Cook, Apple’s Chief Executive Officer, Apple may not require to ‘own a social network’ but it certainly needs ‘to be social’.
Fellow Players Socializing
Apple's competition is rising from Google (NASDAQ: GOOG) and Facebook in the social front. The company couldn’t really make buddies in this segment.
Starting from Facebook, Apple spoiled its relation with it, after a deal as per which it was to incorporate Facebook features in Ping. The pact couldn’t work out between the two companies as Mr. Jobs, the former Chief Executive of Apple who died last year, cited that Facebook was stipulating difficult terms on which Apple couldn’t agree. Last month Apple stated that it would include Facebook features in its next version of the mobile OS. Still things don’t look perfect between the two. Facebook, which manages the world’s largest social network business, is already associated with Microsoft (NASDAQ: MSFT), which has a minor stake in it. In addition, the social network company is trying to build its phone or core software for the device.
On the other hand, Apple’s archrival Google, which gives it a tough ride in the mobile business, has been working hard on its social network Google Plus.
Apple’s agreement with Twitter could mature under the above circumstances where rivals are taking advantage of the growing social media trend and gaining an upper hand.
The integration with Twitter
Apple, which is trailing behind in the social media space, has integrated Twitter into its iPhone and Mac computers as well. For instance, the latest iPhone operating system will allow users to log into their Twitter account. Though the iPhone maker is adding Facebook into the iOS 6, strategically investing in a popular social network such as Twitter makes sense. Twitter, at the moment does not seem to be in need of cash, but associating with a tech giant such as Apple is irresistible. The company is doing quite a bit to keep the iPhone maker engaged with it. In fact, it appointed a Vice President, Kevin Thau, solely dedicating him to Apple and is also concentrating other resources to manage its connection as smoothly as possible.
Twitter: A potential move
Since the time there has been discussions about the possible strategic investment by Apple, some developments have taken place in the budding Web start-up companies. The San Francisco based Twitter has been showing positive signs with its revenue crossing the 2012 revenue estimation that it made last year. Also, the company is so confident about itself that it is ignoring acquisition possibilities and is building its business to go public in a year or two.
Twitter’s relation with Apple is heading strong. In fact, its integration into the iOS 5 amassed an incredible 10 billion tweets since the last fall. The company is building itself at a rapid speed with over 140 million monthly active users engaged in it. An investment by the tech icon Apple would makes things even better along with augmenting its valuation that presently stands at $8.4 billion.
My Takeaway
The deal is yet to mature. However, if this strategic move actually materializes, it will be a win-win situation for both the parties. What’s exciting is to see how the discussion develops and results for both Twitter and Apple. Twitter’s unrestrained market growth with Apple’s ‘think different’ attitude would be an interesting mix, and potentially a fruitful one too.
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