Originally Posted by Libertine

And once again, the people in this industry show how clueless they are.

Let's assume for a moment that Twitter will never generate any profit. Even then, it would still be worth a shitload of money.

Why? The answer is quite simple. Let's just take a look at Google.

Google has tens of billions of dollars in revenue, virtually all of it from advertising. That revenue largely depends on Google's ability to serve relevant ads. Moreover, a major chunk of Google's revenue is derived from their #1 position in the search market.

As content on the internet expands, it becomes ever more important for search engines to deliver timely results. People are starting to expect that if they search for something related to a recent news story, they'll get recent, relevant results.

But that's a problem for current search algorithms. The most relevant page for something that is happening right now might be a story on a new, obscure blog.

Links from other blogs and news stories are a way to get around this, but only partly. While constantly crawling a number of popular blogs is likely to yield relevant results, they only show what bloggers think is interesting.

And that's where Twitter comes in. It shows which topics are popular, if they are increasing or decreasing in popularity, and which pages are getting linked to most when people discuss that particular topic. That data is *hugely* valuable.

On top of that, comprehensive data analysis on Twitter allows a company to identify the patterns which signify that a topic has a large chance of becoming popular before it actually reaches that point. Google already can do this partly by looking at real-time search trends, but seeing how often things get re-sent and such by users would increase that ability even further.

So, a company like Google could benefit greatly from owning Twitter even if it didn't make them any money directly.

However, a new or existing Google competitor could benefit from it even more - because it could give them an edge over the market leader. Which, in turn, means that its value to Google increases, too.

If Twitter manages to prove its longevity, it will almost certainly become the centerpiece of a bidding war involving Google, MS and possibly others at some point - even if it never makes a profit.