The No. 1 Reason Why Google Should Buy Twitter

"Twitter is over capacity. Too many tweets! Please wait a moment and try again."

I can't tell you how many times I've seen that message in the last couple of weeks. At high-volume Twittering times like lunch hour and the morning rush, the microblogging service simply can't keep up -- and throws its hands up in defeat

The problem is obvious: Twitter kicked in the nitrous oxide a couple of months ago and has quintupled in popularity since late December, according to statistics from Google (Nasdaq: GOOG  ) . Twitter isn't really making money yet, and its popularity has brought its server farm to its knees. Hardware is expensive. So is internet bandwidth, when you're dealing with millions of hyperconnected users.

I can think of a few ways Twitter can remedy this problem and return to the silky-smooth instant-broadcasting performance to which its users have grown addicted:

  • Shovel more hardware into Twitter's data centers, which are managed by an American subsidiary of Japanese telecom giant Nippon Telegraph & Telephone (NYSE: NTT  ) . This takes time, and NTT may not have the extra rackspace available immediately. And besides, how would Twitter pay for the new machines? Nope, scratch this idea.
  • Move into a massive-scale hosting service like Amazon.com's (Nasdaq: AMZN  ) Elastic Computing Cloud. Amazon has the hardware muscle and ultraconnectivity that Twitter needs, and EC2 can also be cheaper than having your own hardware. Sun Microsystems (Nasdaq: JAVA  ) will open a similar service later this year, and other giants will probably follow, but that doesn't really help today. This one is plausible, but may require lots of reprogramming before Twitter's software will fit this new environment.
  • Let some deep-pocketed sugar daddy with lots of Internet-facing infrastructure of its own step in and buy Twitter. Under the wing of Google, Facebook, or Amazon, Twitter could get back on its feet quickly, and go back to growing as fast as it might like. Lacking funds won't be a problem anymore.

Of all these options, Google buying Twitter makes the most sense to me. Google clearly has the traffic-handling muscle to handle anything Twitter's users might throw at it, and it's an established leader in distributing complex computing loads across a very flexible infrastructure.

Twitter runs on venture capital right now, having raised at least $55 million from firms like Benchmark Capital and Institutional Venture Partners. Those stakeholders would clearly want a large return on their investment, and Twitter might sell for as much as $1 billion.

Google is on the short list of potential buyers who could afford that kind of splurging on an exciting but revenueless business today. And that attitude is in Big G's genes, too. Microsoft (Nasdaq: MSFT  ) would want a profitable business plan on the table first, and Apple (Nasdaq: AAPL  ) doesn't buy much of anything. Cisco Systems (Nasdaq: CSCO  ) is both rich enough and curious enough to do it, but seems more interested in high-bandwidth video services than lower-volume text applications.

Just buy Twitter already, Google. The little birdie needs your help.

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Fool contributor Anders Bylund owns shares in Google and is growing very fond of Twitter, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like. The Motley Fool is investors writing for investors.


Read/Post Comments (5) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 25, 2009, at 2:00 PM, XMFTom7 wrote:

    Awwww, but the Fail Whale is soooo cute: http://webcraftstudios.com/wp-content/uploads/2008/06/fail_w... :)

  • Report this Comment On March 25, 2009, at 2:08 PM, tettezot wrote:

    The number one reason, in my book, for google to buy twitter is page views.

    The micro blogging websites get massive amounts of pagehits and people refreshing pages just to see an update, this would account for a relatively large amount of ad views also.

  • Report this Comment On March 25, 2009, at 3:15 PM, tgauchat wrote:

    But when will millions of Twitter users finally vibrate the #!$&%^! out of their phones and give up on the stupid thing?

  • Report this Comment On March 25, 2009, at 4:55 PM, ByrneShill wrote:

    The #1 reason why google will buy twitter: cause google always buy a bunch of companies with cool applications but which never bring a penny home.

  • Report this Comment On March 25, 2009, at 5:20 PM, tonycecala wrote:

    How valuable is owning the 21st Century's "dial tone" for opinions, thoughts, ideas, and dialogs?

    How valuable is access to a global datastream of ideas?

    Immensely valuable.

    The internet is a communication medium, not a reference medium. Google's early wins in indexing information do not make it immune from being surpassed by a more valuable technology, the global communication "party line" that is Twitter.

    Because "Advertising is a Bubble"* (including Google's so-called "relevant" ads), in a few short years we may read the headline, "Twitter Buys Google!".

    *Doc Searls: Thesis #74 of The Cluetrain Manifesto says, "We are immune to advertising. Just forget it."

    (My opinions are my own, and I have no financial stake in either company.)

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