The Breaking News Threat to Twitter

How can a chat application threaten everyone's favorite microblogging service?

Jun 19, 2014 at 3:00PM

"Why would anyone use this?" is what many said of Twitter (NYSE:TWTR) in 2007. And, to be fair, many novel ways of using it had yet to be discovered. Updates on someone's breakfast or fight with their landlord seemed like the most trivial aspects of Facebook (NASDAQ:FB). But through the years, we've discovered that people do care about a celebrity's breakfast -- and while news of a landlord fight may not make Twitter valuable, news of broader civil unrest definitely does.

For example, during the Arab Spring, many turned to Twitter to not only broadcast news of events to the world, but communicate with one another as other traditional means of communication were cut. Now Twitter is usually the first place to find breaking news on a subject, from citizens and journalists alike.

News from a citizen about protests in Venezuela.

However, a new trend may take this value away from Twitter, pioneered by apps similar to Facebook's WhatsApp.

Pulling versus pushing
News services like the BBC have been trying out a new way to alert users to breaking news, with a much higher chance of being read than it would have if tweeted. In April, the BBC tested sending out news updates and receiving news tips from citizens before Indian elections through WhatsApp and Tencent's (NASDAQOTH:TCEHY) WeChat. Instead of a user sifting through tweets to find relevant news information, news gets sent out to a user's phone with an alert, similar to that of any text message. With Twitter, Katy Perry's breakfast decisions have equal priority with toppling governments, meaning important news items could be lost in the noise.

It's the difference between a passive, noisy service in which a user has to filter and pull information and an active, focused service in which the relevant information is pushed out to a user.

An opportunity to cross the moat
Many chat applications that are popular in Asia, like LINE, already have features that allow a user to subscribe to news updates, but such services have yet to catch on in America. As Twitter ages, and a user's account becomes cluttered with tweets that may have lost relevance, there's an opportunity for WhatsApp and others to offer a better service in breaking news delivery.

WhatsApp's latest directive from its new owners at Facebook is simply "grow," with no worries about revenue. While Twitter has deep pockets, with over $2 billion in cash and short-term investments, it's unlikely it can outspend Facebook's cash-generating power. If WhatsApp can supplant Twitter as a breaking news provider, then one of Twitter's strongest use cases disappears. Then, Twitter ends up more as a tabloid than a legitimate news outlet.

Or a stronger industry
On the other hand, if more news is delivered through chat apps, more people might read stories on their phones, and then turn to Twitter to find more sources and information. While news consumption is often more about stealing market share than growing market size, it is possible that a more engaged readership could benefit all services.

Twitter will need to be vigilant about remaining relevant either way. This could mean helping users clean up their streams of tweets, rolling out a Facebook-like algorithm to display only relevant tweets, or making high-priority tweets alert a user. It definitely means keeping the population of bots and spam in check -- last reported at 5% of Twitter's users.

Of course, smartphone might be old news in the future
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Dan Newman owns shares of Twitter. The Motley Fool recommends Facebook and Twitter. The Motley Fool owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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