Apple buying Twitter - but why sell now?

Rumours circulating today that Apple will buy Twitter:

Google tried to buy it but was rebuffed by Twitter CEO Evan Williams, says a source with knowledge of the talks.

Today, though, rumors popped up that Apple may be looking to buy Twitter. “Apple is in late stage negotiations to buy Twitter and is hoping to announce it at WWDC in June,” said a normally reliable source this evening, adding that the purchase price would be $700 million in cash.

One can sort of understand an Apple strategic thought process, using it as a groovy unified comms service to run underneath the iPhone, and potentially make it desirable to Twitternuts and get some traffic clawback from the operators - but you don't need to buy them to get those benefits - a commercial deal would do the trick (since it makes no sense to make Twitter proprietary). And Twitter doesn't make money yet - you're probably a $ billion down the hole before any return is seen.

Possibly Apple can derive some benefit from the Twitter social network directories, but being a pub/sub system its hard to see how it is sustainable - if people don't want to hear from you, they tune out. Also perhaps there is some benefit from being a provider of Twitter apps, but again you don't need to own them.

Unless, of course, you are planning to be a mobile Soft Telco down the line, which doesn't make a lot of sense for Apple either - why own the one bit of the value chain that is commoditised by and large, and has huge infrastructure cost, when you have good end to end control anyway.

Also, why would Twitter sell - they have cash in hand for a few years yet and the growth is hardly at its zenith - but a big cash buy is always tempting to investors in "interesting" times.....

If (and this is all still just a rumour) there is something in this, my initial hypothesis would be that Apple is taking a stake in Twitter to underpin some form of commercial deal.

Update - interesting points from Nic Brisbourne

(As an interesting aside the article also notes that the founders were partially cashed out in the last round so they are now “fully aligned” with their investors – a concept we have been pushing here for some time and one that contributed to the success of buy.at.)

That said, I think that for all but the most exciting social media brands (which is probably limited to Twitter and Facebook right now) I think that it is preferable to be mid-sized and profitable than large and loss-making. This is in contrast to the situation a couple of years ago when big exits were available for many high profile social media businesses that had yet to prove their business models. I don’t think those days will be back any time soon.