More quick thoughts on Twitter and Instagram (and Apple)

I posted some initial quick thoughts on Instagram hitting 300 million users yesterday, but there were two articles today that prompted some more quick thoughts on Twitter and some parallels (and important differences) when compared with Apple.

The first article was this one by Walt Mossberg on Apple, and it included this paragraph:

In my conversations with Apple executives, they vehemently insist that market share isn’t — and won’t be — their goal, and even go so far as to say that most public market-share numbers are somehow off the mark, though they decline to explain how.

There are two parts to this: one, Apple doesn’t think market share is the right goal for them to chase, and two, it doesn’t think market observers measure it right anyway.

Now, the second article, which is an interview with Ev Williams, one of the founders of Twitter, commenting rather forcefully on the news that Instagram has more users than Twitter:

Why is users the only thing we talk about? The crazy thing: Facebook has done an amazing job of establishing that as the metric for Wall Street. No one ever talks about, ‘What is a [monthly active user]?’ I believe it’s the case that if you use Facebook Connect — if you use an app that you logged into with Facebook Connect — you’re considered a Facebook user whether or not you ever launched the Facebook app or went to Facebook.com. So what does that mean? It’s become so abstract to be meaningless. Something you did caused some data in their servers to be recorded for the month. So I think we’re on the wrong path.
If you think about the impact Twitter has on the world versus Instagram, it’s pretty significant. It’s at least apples to oranges. Twitter is what we wanted it to be. It’s this realtime information network where everything in the world that happens on Twitter — important stuff breaks on Twitter and world leaders have conversations on Twitter. If that’s happening, I frankly don’t give a shit if Instagram has more people looking at pretty pictures.

Do you see the parallels here? First, a rejection of the metric of choice for comparisons between the company and its competitors, and second, a questioning of the accuracy of those metrics.

I think it’s fair for a company to suggest alternative metrics it wants to be measured by, especially if those relate better to (a) its own strategy and (b) its ability to generate growth and profits for its shareholders. That’s certainly the case for Apple, which generates several times more profits than any other player in the smartphone market despite its minority share, and also captures a great deal of the revenue. But it’s not the case for Twitter, which despite all its attempts over the last few months to point Wall Street at metrics other than MAUs, has failed to either provide alternative metrics in a reliable fashion or demonstrate that those are better indicators of its future profits.

For the record, I’ve no idea whether Williams’ assertion that Facebook counts Facebook Connect usage is accurate, but when Facebook’s users are multiple times Twitter’s users, I’m not sure that matters a great deal. Apple likely objects to market share numbers on the basis that they tend to measure shipments, and shipments are neither the same as sales to end users, nor is shipment market share the same as installed base market share, and nor do they reflect the way in which those devices are actually used. But in Apple’s case, market share actually doesn’t matter to its business model or its ability to generate outsize revenues and margins from what share it does capture. Twitter’s problem is precisely that its MAUs are exactly the source of its current revenue streams, and it hasn’t yet demonstrated how it will monetize the broader bases of users it wants Wall Street to start thinking about. It’s all very well to jump on your high horse about the metrics you want others to use, but you have to back up your assertion in order to avoid looking bitter.

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