The position of Twitter in the pantheon of social media sites is not yet clear. It is not an  “essential” personal portal and playground site like FaceBook (or the now-waning MySpace.) It’s not a compelling free telephone capability like Skype or reference site like Wikipedia. It’s not a news recommendation site like Digg, or Reddit. It’s something quite new – a global stream of thought that you can dip into selectively. I’ve given my rationale for why I think it’s useful in Ten Reasons Why Twitter Rocks, but if I was to sum up why and how I use it, it’s primarily to take a diversionary break between tasks I’m involved in. It’s like having someone to chat to while I’m working.

Right now, the burning issue of the day seems to be whether Twitter will survive – given its tendency to become unavailable or fail to work properly (it’s own euphemism for this is “get stressed out”) The point seems to be that there are a host of other sites that do similar things; FriendFeed, Jaiku, Brightkite, Pownce and Plurk, to name a few, that could become the rallying point for disillusioned tweeters.

First Mover Advantage

Twitter makes an excellent case study for the business concept of  “first mover advantage” – an idea that isn’t as well understood as it might be. First movers have advantages and disadvantages. In most instances, the first business into a new market has an advantage over the competition that follows, because they have more time available to exploit the market, understand how it works and learn from their customers.

But pioneers also get scalped. Remember that the big money on wordprocessors was not made by Spellbinder or Wordstar (both of which were early leaders) and neither was it made by WordPerfect – the first product to become dominant, but by Microsoft, a company that knew exactly how to leverage second mover advantage. It similarly outstripped Visicalc and Lotus 1-2-3 with Excel.

The first mover can make terrible errors and lose money hand over fist or the first mover can build such a lead over the competition that no-one else has a chance at the market. So let’s lay out the argument for Twitter having established a first mover advantage:

Is Twitter Profitable?

No. Of course it isn’t. It had to go cap-in-hand to the VCs for $millions to address its current set of performance problems. But the fact is that it did get the money without too much fuss, which means that the VCs have some level of confidence in the business. How Twitter will eventually earn a living is not clear. The assumption has to be, I guess, that it will be an advertising model. The ultimate goal has to be profitability (or acquisition by one of the few giants that cares little for profitability, like Google or Microsoft). The VCs will have discussed the “exit strategy” in great detail, I have no doubt.

Will the Performance Problems Get Resolved?

And, as I’ve seen VCs in action in some of the advisory positions I’ve held, I really don’t believe that the VCs just said, “Here’s some money, buy a few extra servers and have a nice day.” They will have ensured that Twitter hired performance engineers with a track record of working on busy web sites and scaling them up. The Twitter blog clearly reveals that Twitter was initially built by inexperienced developers. So, by the way, was eBay. Twitter’s performance issues will be resolved in time.

Will Twitter Get Challenged by Any of its Competitors?

I don’t think so, for five reasons:

1. Twitter has over 10 million users – heading for 20 million. Of course many of those Twitter user accounts are dead, neither posting tweets nor listening to them, but a large number of users are far from dead. According to Twitter the average active user is tweeting at the rate of 15 tweets per day. No competitor is anywhere close and those numbers are very big.
2. There is no single outstanding competitor from FriendFeed, Jaiku, Brightkite, Pownce and Plurk. There are advocates for all of these sites. If Twitter was genuinely under threat at the moment then one of these would have emerged from the pack. There is the parallel that Friendster was in business a long time before both MySpace and FaceBook went past it, but Friendster never got the numbers. Twitter already has the numbers.
3. The reason that having the numbers is so important is that it creates a powerful barrier to entry. When millions of people have put in the effort to establish a Twitter identity and link up with (i.e. follow) other groups of people, they will not be easily convinced to move. If you’re going to attract the Twitter population, you have to do it group by group, not individual by individual. In other words there has to be a general exodus from Twitter not a gradual bleeding away.
4. Twitter has a software ecosystem. Quite a few other businesses have formed around Twitter and this makes Twitter very difficult to compete with. It’s not just Twitter, it’s also Summize and Twhirl and Twitterific and all the Twitter widgets and complementary web sites that you have to compete with.
5. Finally Twitter performance problems are not as serious as, say, Skype performance problems. If I depend on Skype and it’s out, I have no phone. Right now I don’t see anyone using Twitter in a “mission critical way”. That may not always be the case, but it is at the moment.

So What’s All the Noise About?

Twitter is experiencing growing pains and incurring the consequences, which include the sniping of a whole bunch of blogger predicting its demise. Many commentators point to Twitter’s downtime record (6 full days last year – and worse this year), expecting the users to jump ship in droves at some point. They point to odd groups of disgruntled users who have jumped ship, but they are exacty that – odd groups.

Perhaps the most important thing to understand that Twitter has become a very very powerful brand. People are buying and wearing T-Shirts with Twitter error messages on. There’s even a YouTube video – entitled the Twitter Whore which satirizes Twitter (see below). Imho, it’s not high quality but how many of Twitter’s competitors would inspire the making of such a video – and have it watched by over 300,000 people.