Please read the case, and answer the following questions

Why are developers reacting so negatively to Twitters purchase of the maker of Tweety?

What changes does this vignette illustrate?

Why is Twitter changing its business model?

What fundamentals of strategy can Twitter adopt to become more sustainable?

Cases Twitter builds on its character Twitter has taken its fair share of criticism in the four years since its launch. Users complained it was unreli- able, critics called tweets frivolous, analysts warned the micro-blogging website was not serious about making money. In the past week, however, the San Francisco- based company has done much to answer its would- be detractors. It unveiled its revenue-making model, released impressive statistics about its size, and introduced a bevy of new products. At Chirp, Twitter's first ever conference for soft- ware developers, which began in San Francisco on Tuesday, users and analysts said Twitter was growing up before their eyes, transforming from a 'start-up' to a 'big company' New direction: 00-founder Evan Williams outlines his vision at Twitter's But at the same time, Twitter, which allows users first conference for software developers to post short messages known as 'tweets', has pro- Source: Getty Images: Tony Avelar/Blomberg. voked serious new questions about its direction, and raised tensions with both users and third-party devel Twitter, said co-founder Evan Williams, will focus opers who have been so crucial to its success. on the 'core experiences' - keeping the platform up Most in the Twitter community believe the service, and running and implementing an advertising system. which now boasts 106m registered users, is still in the Developers should put their efforts into building spec- early days of its growth. I think there's going to be ified products for niche audiences, such as applica- more opportunity now than ever,' said Bijan Sabet, a tions that serve business customers, or harness the partner at Spark Capital and an early investor. 'Get- film and music communities. ting to half a billion users, that's the next step. But even this line between the host and the apps Twitter's most significant move this week was the is blurring. One of the most fruitful areas of third-party unveiling of its revenue model - an advertising system development has been in apps that allow users to similar to Google's highly profitable AdWords. Twitter manage their tweets on a desktop or mobile phone. will allow businesses to bid on keywords and have Indeed, 75 per cent of Twitter's traffic happens not on their 'promoted tweets' appear at the top of search Twitter.com, but through the likes of the Tweetdeck, results. Seesmic and Echofon apps. This is relatively unobtrusive as online advertising Last week, however, Twitter shocked the devel- goes. Yet among Twitter's notoriously fickle commu oper community, saying it had purchased the nity, some users have been rankled by the idea of the maker of Tweetie, the most popular iPhone client, site bearing ads at all. and had developed its own app for BlackBerry The business plan will also potentially hurt at least smartphones. one developer. Just a day before Twitter unveiled pro- This prompted an outcry from developers, who moted tweets, Bill Gross, a seasoned entrepreneur complained Twitter had pivoted from benevolent plat- credited with inventing search advertising, disclosed form to aggressive competitor. his TweetUp service, which was relying on a near 'The strength of the reaction is a testament to the identical model. naivet of the community,' said Mike Hirschland, a This highlights a line in the sand that Twitter has partner at Polaris Venture Partners who has invested drawn with its developers, who have built more than in Twitter developers. 'At some point the platform is 100,000 applications that operate on the site and going to get deadly serious about making money, and interact with tweets you better get out of the way.' That time seems to have arrived. Mr Williams said Twitter was now focused on making money from its 55m daily tweets. 'It's a high priority for us.' To developers nervous that the platform for which they are building software might compete with them, Mr Williams would give no reassurances. 'That's part of the game,' he said. Discussion questions Why are developers reacting so negatively to Twitter's purchase of the maker of Tweety? What changes does this vignette illustrate? 2 Why is Twitter changing its business model? 3 What fundamentals of strategy can Twitter adopt to become more sustainable? Source: from 'Twitter builds on its character', Financial Times, 15/04/10 (Gelles, D.)