Saturday, June 13, 2015

Twitter CEO resigns

Dick Costolo, the CEO of Twitter announced the intention to resign on July 1st, following the broad criticism by investors that it has failed to gain profit for a couple of years.

ITProPortal: Dick Costolo resigns as Twitter CEO, following investor criticism

Twitter said co-founder Jack Dorsey would serve as interim CEO, while seeking the successor of Costolo.

Market Watch: Twitter says CEO Dick Costolo to step down July 1; Jack Dorsey to be interim CEO

Costolo has been the CEO since 2010. He declared to focus on his business to create more revenue. Unfortunately, the stock price of Twitter has not been raised at all.

(This image is quoted from this site.)

What happened, or not happened in Twitter?

Twitter has hundred millions of active users. Its position as an casual communication tool has been established. However, its monetizing strategy does not seem to be successful.

One of the reasons is that the channel of income is limited. Twitter relies on the advertisement fee from companies with partnership. This business model is not a new one. Google, Facebook, and enormous other companies can be a competitor.

The New York Times: For Twitter, Future Means Here and Now

In addition, it is doubtful that users of Twitter will potentially be a new customer of the company which provide advertisement. Considerable amount of the users come from developing countries, in which people tend not to spend much money for goods influenced by advertisement.

Nowadays, several IT companies release online games via Facebook, Line, and other portals. But they are struggling to gain enough profit from users from other than some developed countries. Different from Facebook, Twitter does not equip additional functions working on the original site. It makes difficult to lead the users to new services.

To begin with, advertisement business is approaching to the turning point, I think. Although there is more room to make profits in this kind of business, it will be more challenging to attract people's attention with a simple advertisement. We tend to buy goods whom close friends recommended. Ironically, social network is replacing the field of advertisement itself.

Twitter has been an essential infrastructure. But improving its fiscal status is challenging. I wonder what kind of solution is proposed by the next CEO.

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