As a former IBM competitive analyst, I found it particularly enjoyable to compare companies other than my own. Even in the business world, no one wants to hear that their child is ugly.
Meta has brought Threads, a similar Twitter copycat, to the market. A similar effort would usually fail because it is difficult to convince customers to switch from one service to another by simply offering a similar product. You have to disparage the competitor’s pProductto change their behavior successfully.
Elon Musk’s product caused so many users to leave him that he could lose a large number of users to another service without Musk.
We’ll explore the coming battle and why it may be disastrous for Twitter. I’ll end with the product of the week: Alienware’s new m18 gaming product, a powerful laptop with an 18-inch display.
IBM vs. Sun Microsystems Example
When analyzing a potential future competition, it is helpful to start by looking at similar situations that have occurred in the past. A good example is the 1980s fight between Sun Microsystems and IBM, which I witnessed firsthand
IBM believed that in the 1980s, ustomers were so firmly rooted in IBM that thatheyould not move. IBM, herefore, hd complete control over their lives. I have brought this up tup toe head of marketing of my unit a a potential problem. Customer surveys showed that our customers were very upset. He said that what we do is like air. Customers don’t have a choice.
Sun Microsystems, however, was pushing an unworkable solution and yetaged to put IBM out of busbusiness byffering an alternative. People were so fed up with IBM’s mistreatment that they took advantage of Sun salespeople, ho used IBM’s bad behaviour to force the change.
As I have noted, it was not an easy switch, and the new technology is still not working. IBM, which was the largest technology company in history at the time, nearly went bankrupt, had its CEO fired, and faced massive layoffs.
IBM has since regained its reputation as a trusted vendor in the tech industry by treating customers well and not locking them in. However, it hasn’t fully recovered the power it once had.
The excessively high switching costs inherent in IBM products and services saved IBM from a total collapse.
Twitter is not an enterprise vendor, like IBM. There are no contracts or massive dependencies that make it difficult to switch between services. Elon Musk’s changes in Twitter’s policies and operations have caused many users to leave, even though the replacement services, such as Mastodon, Truth Social, and others, are not at all similar.
Twitter is losing users at an alarming rate. Musk made questionable decisions every time it seemed Twitter was about to turn a corner. This caused more users to leave. The latest move is to limit the number of tweets that a user may read for free. This is despite Twitter not creating its content.
Twitter’s policies had also ivendriven away advertisers at a time when there was no good alternative to the expenditure. Once an advertiser has spent money on advertising regularly, they are effectively locked into the medium that they advertise in.
Even though it may be difficult to attract advertisers, once you’ve got them, they will usually stick with you, even if your ads don’t work, unless something is done to upset them. Advertising on Twitter is a risky business.
The majority of these advertisers advertise on Facebook and other social media platforms, so it is easy for them discontinue their relationship with Twitter and switch to Threads. This, in their eyes, is a well-known entity that has less risk to its brand than Twitter.
Threads
Threads is a near-clone to Twitter and were officially launched on Thursday. It promises to address the most common issues that anger Twitter users and better treat them. Facebook is not without its problems, especially regarding the seemingly inconsistent moderation. However, it’s still far less irritating than Twitter.
Although some do not trust Zuckerberg, it is not a mass exodus. Despite initial concerns about Facebook’s low conversion rate, advertisers seem to be happier on Facebook than on Twitter.
The combination of Twitter’s frustration, low switching costs for advertisers and users, and many people’s belief that Facebook is more reliable, stable, and trustworthy than Twitter could create a perfect storm.
There are two possible downsides.
Meta/Facebook could not have anticipated the loading of users, and enough users may jump onto the platform so fast that it fails. Meta is a massive company, and we should expect this. However, other companies have experienced similar issues because they did not anticipate loading correctly. Initially, the services were unreliable and slowed migrations.
Meta does not market itself well or very often. The speed of migrations could be affected by a lack of marketing. This disadvantage could initially be a benefit for Meta, as it will help ensure that the servers hosting Threads won’t fail. If it hasn’t crashed yet, we should find out soon.
Wrapping up
Elon Musk’s management of Twitter created a perfect storm, which could lead to Meta’s Threads platform doing to Twitter what Facebook has done to Myspace. Remember how quickly Myspace failed? This perfect storm has the potential to render Twitter unviable as a business if Threads are able to take on the load. (And if Threads huge If), leading Twitter to lose more users and advertisers than it can sustain.
This failure could have a negative impact on Musk’s other businesses in terms of valuation and reliance. It will also lead to media coverage that is anything but positive. A truly catastrophic failure of Twitter would have cascading effects on Musk’s other companies, and some of them may even reconsider Musk as their CEO.
If it happens, I’m expecting it to happen fairly quickly. Twitter’s and Musk’s future should be evident before the end the quarter, and perhaps even this month. Tof he next few months will be interesting to watch. Regardless of the outcome, it’s a good lesson to learn that challenging a competitor in a ccagematchis not always the best solution to a huge competitive disadvantage.
In Zuckerberg’s opinion, this match is a no-brainer. Musk will be distracted from developing a better Twitter defense because he’s already prepared for the game. Musk is more important to Twitter’s defense than Zuckerberg, which suggests that Zuckerberg has matured better in his role as CEO.
