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Twitter running out of steam?

It seems as if Twitter's growth is plateauing which is not good news for a company which, after eight years of successive losses, is still bleeding red ink at the rate of US$645m a year.

Although the company got off to a good start, with high rates of growth and becoming the darling child of a lazy mainstream media, things are changing and it's starting to look a lot like the service is about to peak.

The last quarter figures show it earned a healthy $250m in sales but still managed to return a $132m loss -- signifying the huge gap between income and expenditure.

While such a gap might be acceptable for any hi-tech startup, the reality is that Twitter is no longer a startup -- it is a mature player.

If the company has begun to reach saturation within its marketspace then it has to come up with some way of doubling its revenues without incurring extra costs. A big ask!

The problem with Net-based businesses like this is that they generally only have a limited window of opportunity. Those which don't take full advantage of that window will inevitably find themselves facing competition from new players with smarter ideas and battling to service a mountain of debt even if profits do begin to flow.

Twitter's biggest problem is perhaps its reliance on the mobile platform for delivering its content -- and the very small size of its SMS-like content.

Traditional services which dish up full pages of valuable content can afford to slap a decent amount of advertising on those pages as a way of paying the bills and earning profits. It's a whole lot harder to slap any significant form of advertising onto a single paragraph of text which may offer nothing other than notification that the sender has spilled their coffee.

What Twitter has to do (IMHO) in order to stem the flow of red ink is to sit back and anaylse where its value lays -- and that's in its user-base.

The reality is that they're probably never going to be able to leverage their short-messaging service to squeeze a profit however, if they can deliver a desirable service with a greater value component to those users, the future would look a whole lot brighter.

In order to do this, Twitter will have to reinvent itself and start from scratch, in terms of its product. They need to create a separate team of "smart guys" to try and come up with a "next big thing" that they can turn into a reality.

In this regard, they are just like every other would-be startup -- except that they already have the much needed critical mass required to make such a service a commercial success.

The planners at Twitter shouldn't look at their short-messaging service as a gold-mine in itself but as a valuable tool for creating a user-base that can then be shifted to the next high-value service they roll out. Twitter is, and always will be, a tool for marketing Twitter -- no more, no less.

The real money (if there is to be any) will have to come from a yet to be announced (or even thought-of) service.

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