Is Twitter The Next Hula Hoop?

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Microsoft (NASDAQ:MSFT) and Google (NASDAQ:MSFT) have each formed a partnership with micro- blogging company Twitter. The search engines at the firms will survey the real time “tweets” , which are small text messages of only a few words, from Twitter’s millions of users. There is some important information to be gathered in all that “real time” communication, or at least Microsoft and Google think so.

Access to Twitter’s tens of millions of users may give insights to marketers who want to know how people use their brands, to news organizations who want to know what people will watch or read, or the government which may want to spy on people plotting by using Twitter as their means of communications.

Twitter forecasts that it will eventually have one billion users. That does not make the company a success. It will only bring in $4 million in revenue this year.

There is a chance that Twitter is simply a fad like the hula hoop. In 1958, Wham-O, the big hula hoop company, sold 100 million of the products worldwide. Fairly soon after that, the only place to find a hula hoop was at a garage sale.

Even if Twitter keeps most of its customers there is no reason to be sure that the people who use the service are communicating anything important to one another. Micro-blogging and texting are often ways for the bored to spend their idle time chatting with their friends. But, Microsoft and Google may find some information in those mindless exchanges.

The real risk to the money being invested in Twitter and the effort that search companies are making to mine Twitter data is that “there is no there there”. Just three years ago, MySpace was the next important trend in internet communication. Advertisers would be able to use the behavior of its members to gather information and target their goods and services.  Today, its owner, News Corp (NYSE:NWS) has it on life support. Twitter’s future is as just as risky.

Douglas A. McIntyre