Twitter may finally be running out of time.
News at the end of last week that Google and cloud software company Salesforce have both held preliminary discussions about a possible acquisition have underlined waning Wall Street confidence in the social media group's attempts to reinvigorate growth and maintain its independence.
Fifteen months after the return of co-founder and product visionary Jack Dorsey, Twitter has failed to come up with the new ideas needed to reach a wider group of users. It also admitted after its last quarterly earnings that it was not doing enough for advertisers to justify its current pricing.
"They are charging a premium but not delivering a premium," says Jan Dawson, a tech analyst at Jackdaw Research.
Against that background, the preliminary acquisition discussions have raised an inevitable question: If Twitter's current management cannot reap more value from Twitter's distinctive real time social network, is there anyone else who could?
There is no guarantee the preliminary acquisition talks will lead to anything more serious. But the sight of companies as different as Salesforce and Google expressing interest shows the very different uses that potential buyers might have for the network.
Marketing Services
Salesforce's focus on sales and marketing software has shone a spotlight on one of Twitter's main assets: the real-time information it can supply to corporate marketers about millions of their consumers.
"This provides sales professionals with very valuable data about their targets, and combined with Salesforce capabilities it could become even more useful in terms of lead generation," says Martin Utreras, senior forecasting analyst at eMarketer.
Besides the data, ownership of Twitter could bring direct interaction with large numbers of customers, and access to a network that is increasingly becoming a direct tool for customer support. "It's about connecting with your customers where they live, and having conversations with them," says Ryan Holmes, chief executive of Hootsuite, a social media marketing company.
Salesforce lost out to Microsoft three months ago in the competition for another internet company with a highly valued database, the professional networking company LinkedIn. While LinkedIn's data about individuals would generate sales leads, Twitter's data would provide a broader set of signals of use to marketers.
But the arguments for owning the Twitter data are not as strong as those for buying LinkedIn. A deal would be "a leap of faith", says Brian Wieser, an analyst at Pivotal Research. He called the rationale for a deal "squishy", adding that, compared with the practical uses to which LinkedIn's data could have been put, the case for integrating Twitter "is just not as obvious".
Nor is it clear why Salesforce — or any other company — would buy Twitter just for this access to the data. "You get a tonne of data [by buying Twitter] but there are other ways to get at it," says Mr Dawson of Jackdaw, such as working with companies that already have licenses to access the Twitter "fire hose" of information.
The cloud software company would face other challenges, beginning with the fact that it has no experience of running a large consumer internet service, let alone one in need of repair. "Salesforce is fundamentally an enterprise company. Yes, there's an angle for customer service, but it's not what Twitter is really about," says Mr Dawson.
Salesforce might also find it hard to sell a deal to its own shareholders. Its stock price dropped nearly 6 per cent on Friday on news of its interest in Twitter, taking the total decline since it lost the battle for LinkedIn to 14 per cent and leaving its shareholders facing considerable dilution if it attempted to use its stock for such a big acquisition.
Consumer Technology
Google's interest in Twitter points to the sort of acquirer who would be able to reap the most immediate value from a deal.
"Google could certainly justify paying more than most for it, it would become an add-on product," says Mr Wieser. The search company would be able to instantly boost profit margins, taking out costs and pumping its own advertising into the network. Twitter could become a new growth engine for Google's advertising business, which faces a challenge as it tries to translate its search business to mobile devices, he says.
The data on Twitter's own 313m active users a month would also complement Google's other businesses. "Twitter could provide them with valuable user data that they could leverage for their own ad products, which in turn could be very attractive for ad buyers," adds Mr Utreras.
The same considerations could apply for Facebook. However, the historical rivalry between Twitter and Facebook may present a barrier to any deal. Even without that, at this point Facebook would gain access to few new kinds of users that it does not already have somewhere across its many apps.
Meanwhile, Apple, like Google, lacks a presence in social networking, something that has fed persistent speculation in Silicon Valley about a possible tie-up with Twitter. The iPhone maker's own attempts at introducing social networking to its products — from iTunes' shortlived Ping to Apple Music's recent Connect feature — have gone nowhere. Apple even briefly considered investing in Twitter in 2012, before it went public, people familiar with the talks said at the time.
Like others, however, Apple could get access to Twitter data without owning the company. "With both Google and Apple, the theory is they are no good at social [media] so Twitter could fix that," says Mr Dawson. "But all it gets you is a standalone business — not any meaningful integration with the rest of the business."
TV and Digital Video
Under Mr Dorsey, Twitter has made only minor changes to its core service — except in one area that may appeal particularly to media companies.
"Jack seems to have pivoted pretty sharply to live video — to the exclusion of all else," Mr Dawson says. For media companies spooked by Facebook's similar focus on live video, on a much larger scale, Twitter could offer a broadcaster a foot in both online and offline viewing. It has also become a forum for discussion about the sort of live events that drive TV viewership, raising the prospect of closer integration with TV shows.
However, despite high-profile promotions around live events such as the Wimbledon tennis tournament, viewership on Twitter remains a tiny fraction of traditional broadcast. An American football game between the NFL teams Buffalo Bills and the New York Jets shown on Twitter earlier this month — the first product of a deal to stream regular games — attracted an audience of more than 2m people, compared with 48m who watched it on TV, according to ratings company Nielsen.
Also, were it to be bought by a media company, Twitter might find it hard to maintain its role as a neutral network used across the entire media industry. "If Fox bought it, would CNN continue to use it for breaking news? Probably not," says Mr Wieser at Pivotal.
Other companies that see digital video advertising as an important source of future growth, such as Verizon or AT&T, might also be tempted to make an offer, says Mr Utreras at eMarketer.
With so many potential buyers, what might tempt others to make their own approaches? "It comes down to price," says Mr Wieser. "Whether it's $ 15bn or $ 30bn, that makes a big difference."
After a 21 per cent jump on Friday, Twitter's value has risen to nearly $ 20bn, or some $ 7.5bn more than it was worth at the start of the summer. Almost all of that has come on takeover speculation. But it is still worth less than half what it was early last year.
Unless Twitter's owners are prepared to settle now for much less than their company once seemed worth, any agreement on an acquisition will be hard to reach.
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