Everyone freaked out over the weekend, when talk popped up of Apple investing in Twitter. It’s not happening for one very simple reason: Apple doesn’t need to.
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The Wall Street Journal reported that Apple had discussions last year about investing in the San Francisco-based social network. TheNew York Times said these talks occurred in recent months.
Tons of people linked to their own websites saying, “Why Apple Must Buy Twitter,” (heck, I even did it last year when the talks were reportedly ongoing) but there’s one thing they fail to realize. Tim Cook, the guy who runs Apple, doesn’t want to. It’s not in the company’s DNA.
Apple has always said if they cannot do something perfectly, they don’t do it. They are in a few categories (phones, computers, tablets, MP3 players) and that’s it. The majority of Apple’s revenue comes from the iPhone, and buying a burgeoning social media network isn’t going to help sell more iPhones.
Speaking at a AllThingsD conference earlier this year, Cook said, “Apple doesn’t have to own a social network, but does Apple have to be social? Yes.” Apple tried to own a social network (remember Ping?), and that did not go well, to say the least.
If Google had bought Twitter, this could’ve forced Apple’s hand in changing its thinking. But it didn’t.
Facebook, Twitter, and Google (Google+) have proven to varying degrees of success that there is money in social media, but it’s a lot less than selling millions of iPhones, iPads, and Macs. Apple is not going to deviate from the strategy of doing a few things, and doing them better than anyone else. That’s what made Apple the company it is today.
Apple has no problem integrating social networks into its hardware, having done so with Twitter in 2011, and Facebook this year, but it doesn’t need to own one.
Apple generates billions and billions of dollars in revenue from selling hardware, but few know about its ad business, iAd. That division of Apple has not done so well, and with good reason. Mobile monetization has not been figured out by anyone. Twitter is reportedly going to generate around $259.9 million in revenue this year (according to eMarketer), which is a drop in the ocean compared to Apple’s overall revenue.
Everyone who says “Apple needs social” should look at the declining revenue growth in Facebook as the prime reason why Apple is better off partnering with these companies, and not investing or owning them.
There’s no point in buying the cow, when you can get the milk for free.
—By TheStreet.com’s Chris Ciaccia
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