Going public gives Twitter a sustainable future, analysts say

The capital gained from an IPO could expand the Twitter ecosystem, some said

The days of shrugging off Twitter may soon be over. Some 200 million users strong, the site is already one of the most prominent social networks, but going public could give it the muscle to become the next Facebook or Apple, one analyst said.

"This is a great move for Twitter," Brian Blau said Thursday of Twitter's announcement via tweet that it had confidentially filed plans for an initial public offering.

"It's Twitter growing up, coming of age, maturing ... all those things," said Blau, an analyst with Gartner who focuses on consumer technology and social media.

"This gives it a sustainable future," he added.

IPOs are generally seen as a way for companies to gain additional cash for operations or expansion. In Twitter's case, the capital gains from going public will likely allow the company to make solid investments across the board in hiring, operations and acquisitions, analysts said.

Those are things Twitter has already been doing over the past several years. But buzz has been building for some time around an IPO, and for good reason.

"Investors want liquidity," said Greg Sterling, an industry analyst with Opus Research. "There's been pent-up demand with both employees and investors in mind," he said.

But the implications of an IPO are profound for Twitter, because the capital gains could help the site expand its ecosystem among different users like developers, marketers and consumers, Gartner's Blau said.

Twitter is a social network, but it's also a big publishing tool. In recent years the site has signaled that it wants to be a place not just for connecting people, but for letting companies connect with consumers by publishing new forms of content on the site.

One such area of growing interest to Twitter is television marketing. In July Twitter announced the national availability of a TV ad marketing program to let TV marketers push out branded content to people on the site if those users were tweeting about certain shows. Just last month Twitter announced its acquisition of Trendrr to better analyze those TV-related tweets.

That's one program that Twitter could build out and accelerate through an IPO, Opus' Sterling said.

Going public may also let the site do more with analytics and video too, he said.

Twitter has also been working hard to court outside developers. Last year the social network launched its "Cards" program, which lets developers and partners like newspapers attach certain media to their tweets like photo galleries and mobile app downloads. An expansion of that program was announced this past April.

An IPO may allow for more of these types of scale-ups that could make Twitter more like a Facebook or Apple, Gartner's Blau said. Third-party developers are a mainstay of Apple's App Store, and Facebook too. Facebook for instance recently acquired Parse, a company that provides a hosted back end for app developers.

There is the possibility that by going public and by wooing more outside marketers, Twitter could become too "corporate" or lose its hip factor. Facebook, which went public last year, has seen some similar criticism.

Twitter's uniqueness may override such concerns, Gartner's Blau said. The type of social networking the site provides -- "so far it hasn't been replicated," he said.

The bigger issue may be finding a way to get more people to understand how Twitter works. The site limits its users' posts to 140 characters. But to a person unfamiliar with the service, the site's content can be hard to understand, because many users resort to abbreviated URL links, "hashtags" denoted by the "#" sign, and sometimes abstruse idioms to get their point across.

Twitter recently tweaked its site and mobile apps to give users a way to share their Twitter conversations with others outside the site, in an effort to show laypeople how conversing on Twitter works.

Twitter was founded in 2006 by Jack Dorsey and Biz Stone; its CEO is Dick Costolo.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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Zach Miners

IDG News Service
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