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Apple Gets Social : A Potential Investment in Twitter Abounds


By Pradyut Hande

After conquering the electronic realms of computers, portable music players, smart phones and tablets; Silicon Valley behemoth, Apple Inc. has trained its sights on "biting" into the social media pie. At a time when communal networking is growing in popularity the world over and competition in a nascent albeit fragmented market is enhancing exponentially; venturing down strategically diverse avenues, keeping the company's core competencies in mind, is critical to maintaining a market stronghold. Having floundered in its endeavor to make a dent in the social media space thus far, Apple is now contemplating a strategic investment in Twitter to further its efforts at galvanizing its social network market presence. The impact of social media on consumerism and buyer behavior cannot be undermined in a global economy. Thus, Apple's impending foray into this domain promises to open up a plethora of opportunities at both a macro and micro level.



"Apple doesn't have to own a social network. But does Apple need to be social? Yes!", said CEO, Tim Cook recently; words that are reflective of a potential investment down this channel. An impending stake purchase in a market leader like Twitter would create far reaching consequences for both companies alike.

What's in it for Apple?

For starters, one must note that it is not as though Apple hasn't tried to make inroads into the social media market in the past. It is just that its efforts have fallen flat in the face of mounting competition from perennially proactive rivals. For instance, Apple's relationship with Facebook got off to an inauspicious start when attempts at integrating key Facebook features into its own music-oriented social network, Ping, came undone owing to mutual disagreements. Additionally, the fact that a major competitor, Microsoft, already owns a stake in Facebook; makes Apple's position in this space all the more vulnerable. Add to that the mounting pressure being exerted by an upwardly mobile Google with its own social network, Google Plus, and Apple's "social media market experiment" thus far, pales in comparison.

However, fortunately for Apple, its attempts at priming Twitter as an integral partner has spawned a more mutually rewarding relationship in the past. The company has incorporated the latest Twitter features in the robust Apple OS that runs on its computers, laptops, smart phones and tablets. Over time, the Apple - Twitter alliance has tread the path of calibrated stability. Perhaps now is the time to take the relationship to "the next level".

With over USD 117 Billion in liquid assets in its coffers, a financial investment in Twitter at this juncture in time appears to be a prudent move. It would mark a departure from its prevalent strategy of primarily buying out upcoming start ups that can be strategically integrated into its global supply chain. Furthermore, a potential deal would help Apple leverage Twitter's competencies, reach and marketing prowess to gain a valuable foothold in the social media arena. It may not bestow Apple with the market leader position it is so accustomed to, but it would definitely pave the way for bigger and better things to come. While its competitors (and allies) attempt to enter the mobile phone and tablet markets (read Google and Facebook), Apple's proactive surge in social media would serve as an effective "counter". With mergers, acquisitions, strategic investments and an expanding portfolio of competencies fueling greater possibilities; the tech market remains in the throes of perennial flux and caprice. Apple's potential move thus, is not just prudent...but also necessary.

What's in it for Twitter?

With almost 150 million monthly active users, micro blogging site, Twitter has been at the forefront of the "social networking revolution" in the last few years. It may have carved a niche for itself, but in an unpredictable market it ought to remain vigilant and receptive to change. A potential investment oriented alliance with Apple would further augment its strong financial position. Twitter has more than USD 600 million liquid assets, primarily accrued through advertisement revenue.

Furthermore, it would prop up its valuation from USD 8.5 Billion to approximately USD 10 Billion. Being closely associated with a technology giant like Apple would consolidate its market perception and position. It would also come as a much needed shot in the arm in the face of widespread conjecture surrounding the over valuation and inflated potential business projections of social media companies. In the wake of Facebook's lackluster showing on the share market, investors are liable to tread with caution.

An investment by Apple would also prop Twitter up suitably till its impending IPO a few years down the line.

Thus, a potential deal would spawn and augment a mutually beneficial relationship in an increasingly dispersed market landscape. The fact that Twitter does not plan to venture into Apple's traditional markets, lends credence to the partnership's solidity. This is unlike the situation with companies like Google and Facebook that have stepped up efforts to challenge Apple's supremacy in its familiar stronghold of the mobile phone market.

Whatever be the case, all these company directed undertakings are symptomatic of a gradually changing consumer mentality. A strong consumer focus coupled with a vigilant eye on the competitor in the rear view mirror and sound strategic sense will be the name of the game moving forward.

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Pradyut Hande
The Writer is a Business student with a degree from NMIMS, Mumbai. He is presently working as a Senior Executive with a leading Public Relations firm in Mumbai. He has over 200 publications to his credit in some of the leading national dailies and weekly magazines across the country. He is also a keen Debater, Munner, Quizzer, Painter and Amateur Freestyle Rapper. His other interests include Sports, Music, Reading, Travelling and Social Entrepreneurship

 

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