Telephony 2.0

Twitter — the tech-elite-popular SMS-like micro-publishing/messaging service, if you didn’t know — this week announced $10 million in funding, including an investment from Amazon founder Jeff Bezos.

The Bezos addition is interesting because if anyone knows how to scale an online business it’s Amazon — and Twitter definitely needs help scaling because despite (or probably more likely because of) its popularity the service has suffered repeated downtime.

In announcing the investment, the Twitter blog proclaimed the service’s goal was not to come up with a business model (at least not yet) but rather to establish itself as “a global communications utility.”

At its core, Twitter is SMS-for-large-groups. If with SMS you send a personal message to one person, with Twitter you send a not-so-personal message to everybody “following” you — for some super-users, that’s thousands of followers at a time. The result is a kind of highly-distributed “town-crier” effect in which news and new ideas spread very quickly across the Twitter-sphere.

As a would-be “communications utility” and a clear cousin to the extremely lucrative SMS, Twitter would seem to hold appeal to service providers. But without a business model in sight, can carriers really be bothered with Twitter? The clear answer seems no.

And that’s too bad, because Twitter could use a dose of “five-nines” religion right now if it’s ever to make it pass the early adopter phase and into the mainstream. As the telco industry knows, the SMS explosion came with its own growing pains.

The biggest difference, however, is that even as SMS was growing (and struggling to grow) carriers were able to track — and bill — on per-SMS-message basis while Twitter continues to search for a way to turn Tweets into revenue.

Image by Getty Images via DaylifeMicrosoft’s long pursuit of Yahoo ended this week with Yahoo opting instead for a search advertising deal with Google.

I’ve been watching this dance for a quite a while, and a few things have become clear to me:

• Google owns online advertising. Between its search/mobile text ad business and banner business with DoubleClick, the game’s pretty much over. Now, businesses can go to Google and get their ads placed on Yahoo as well. For telcos, that means getting into bed with Google as well on advertising.
• Yahoo will likely slide into irrelevance, in large part because execs are seemingly headed to the door after shares plummeted to $22 today (down from Microsoft’s likely $33-plus bid).
• Yahoo’s slide is unfortunate, because it has some market-leading registration-based services, including mail, Flickr, Delicious, etc. Some service providers still have portal deals in place with Yahoo; these should be re-evaluated.
• Microsoft may have struck out with Yahoo but I think they should turn their full attention to the carrier market. It just makes too much sense. They are already partnering with service providers on IPTV, MediaRoom, ConnectedServices, etc. And cutting sweetheart deals with wireless providers around WindowsMobile would be a good way to ensure that Google (with Android) and Apple (with iPhone, and a likely long-term Google partner) don’t sew up the mobile space as well.In fact, Microsoft (MediaRoom plus Xbox plus Zune (yes Zune) plus Windows Mobile) partnered with carrier Quad Play offerings would be a perfect package to go after mainstream consumers – let Google and Apple win the early adopters (and monetize them largely via advertising. MS+telcos can chase massive ARPU (and real subscription revenue) with their joint offerings.

I think a Microsoft – telco matchup (and subsequent service mashups) is an intriguing combo.