So I woke up today to the news that Twitter had acquired iPhone app Tweetie. Tweetie is probably the most successful Twitter client for iPhone out there, arguably the best depending on what you need, so it wasn’t really a surprise that Twitter chose Tweetie to purchase, and rebrand to “Twitter for iPhone”. In addition to this, it should also be no surprise that this happened after Twitter recently launched an official app for the Blackberry too.

A few things irk me about this whole deal though.

Twitter’s business model

I just don’t get it. They purchase an application from atebits which no doubt cost them a pretty penny (Twitter minus $$$), they hire the developer onto their mobile team (Twitter minus more $$$), and they reduce the cost of Tweetie from $2.99 to $0.00 (Twitter minus any future income from said purchase).

There’s something just not quite right about all that. The only way I can see this working is by Twitter somehow hoping that having official apps ultimately ensures Twitter usage, which allows them to resell stats/data from that.

The only other way they can possibly start earning from all of this is to stick ads in there.

Acquire Market-share App + Insert Advertising = $$$

That’ll be fine for a minute, until everyone hates the ads, and wants an ad-free experience like the good ol’ days, jumps ship to an ad-free third party app that they paid $2.99 for.

Of course, then they could include a subscription model, but that’s just a mental scenario right? … Right?!?!

If you ask me Twitter have waited far too long to introduce advertising, if that is their plan. As the days go by, more and more people come onto the service, and see an ad-free environment. Introducing that sometime in the future is going to be a bitter pill to swallow for a lot of users.

Look at Facebook, they have ads, most people don’t give a heck – because they did it ages ago when their user numbers were lower. I guarentee if they started over and did it tomorrow there would be a massive outcry. Whilst Facebook get a huge bashing this way and that, they’ve made some sound decisions from a business perspective in many areas, and continue to make it work.

Twitter however, is running out of time.

Twitter Ecosystem

In addition to doing all this, they’ve effectively sent a smashing tidal wave into the Twitter mobile app eco-system which they’ve helped so much in the past 2+ years. You know, that same eco-system which they thanked for helping Twitter become the service it is today.

By taking an app which easily is the most feature rich, has the best UX, and making it free, they’ve made third party developer’s biggest competitor an out right winner. Sales in apps like Twitterrific, Echofon et al are inevitably going to dwindle now, leaving them with no choice other than to get using advertising themselves in their apps to keep up, or to go elsewhere and find another source of revenue.

I know I’ve made my choice. For a couple of months I’ve pondered on whether or not to make Chirpie a full Twitter client for iPhone. Heck, I even started some development on it – but not any more. This deal by Twitter has put that fire out in a pinch. There’s literally no point in trying to compete with that – you can’t compete with great + free.

Exodus

This whole thing seems really badly timed. Twitter’s developer conference “Chirp” kicks off next week. What no better way to say a big “Thank You” to those developers than to cut their revenue stream in a matter of weeks. (Yeah, I said Thank You…. )

Like Fred Wilson said, maybe it’s time for developers to stop developing for Twitter, stop plugging gaps, as those gaps are gonna disappear! I think those gaps already started to go!

We’re going to see an exodus. We’ll lose competition from other Twitter clients, and ultimately Tweetie (or Twitter for iPhone/iPad) may suffer as a consequence. Only then can viable competition re-emurge. Like I said earlier, it’s pretty difficult to beat something that is great and free at the same time, but as soon as it’s not great anymore, it’s hello gold rush time!

In the meantime though, expect third party developers to go a bit quiet whilst they reassess how they move forward, and whether or not they continue developing Twitter clients for an eco-system which is slowly dying.