Twitter’s vertical integration

While its business model is not readily apparent, Twitter has pursued one clear strategy: built it and they will come. They put in place a service and then some clear, open APIs and let all and sundry exploit it. That has led to websites and applications for desktops and phones. It also led to innovations such as “re-tweet” and, indeed, the “tweet” which Twitter adopted.

Today, Twitter announced that it has purchased Atebits, the maker of the very popular iPhone app, Tweetie. It is the program I use on the iPhone although I use Tweetdeck on both the desktop and the iPad. But Tweetie is, in so many ways, a beautifully conceived design. So Twitter have chosen the pick of the bunch.

But the move marks a change in strategy. On the one hand, it is great news for Atebits, who while they must have made a mint selling Tweetie, now can cash in. For would be developers, there is now a new prize: win Twitter’s attention. On the other hand, one suspects that Twitter is only going to have one integrated iPhone app (or desktop app for that matter). That means the other developers no longer have that prize open and also now have to worry about Tweetie being both free and official. The loss in market share while surely stifle innovation. And while I like Tweetie, many use other applications and so losing diversity in development is a worry.

So there is a dangerous trade-off here for Twitter developers. The acquisition signals that there is a big prize from a race to be the best: bigger than that without it because you get market leadership with the prize and get to face a tough competitor without it. However, there is a risk that it will reduce the number of experiments on features for these applications — especially from this point on.

One thought on “Twitter’s vertical integration”

  1. I buy the VI aspect of your argument, but not the risk-avoidance implications.

    Why would a firm by less likely to seek points of difference now? Have Twitter revealed a clear preference for one sort of approach or advantage over another? Have they set clear benchmarks for acquisition?


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