The Second Generation Twitter: Adwords and photo sharing ready to hatch.

It’s been a busy time for Twitter lately, firstly with the huge furore that surrounded their announcement to change the rules for developers, and secondly when they announced their acquisition of Tweetdeck (evidently now the two go clearly hand in hand). Now, the are two more rumoured expansions for Twitter: Adwords and photo sharing. It seems Twitter is in the process of new acquisitions that could see them expand its service offering both to advertisers and consumers, which could really see the site come of age among a backdrop that’s traditionally seen them leave the innovation to others.

Launching Twitpic competitor

When they made the announcement to developers earlier this year, Twitter made it clear in no uncertain terms that the apps and clients should be left to them. While this flew in the face of the healthy developer community they’d built up and had seen the site to where it is now, for Twitter it certainly made sense. Why continue to leave the good stuff to everyone else and allow them to make their own name off the back of your service?

The likes of Twitpic and YFrog could be the latest vulnerable companies here, as Twitter seems due to launch its own photo sharing site any day now. Of course, itcould pull a Tweetdeck on us and simply acquire Twitpic instead of launching a native photo sharing functionality, but it’s likely Twitter will want to put their own stamp on this and prove that they can build great products as well as any developer out there.

What this could eventually mean for Twitter is the end of an affair with developers. This latest move shows that no area is off-limits to them and even the most established services are under threat (or ready for acquisition, if you choose to look at it that way). This will severely impact developers who are planning new products around the Twitter API as you could have a fairly short shelf life if Twitter just decides to integrate what you’ve taken the time to prove as a viable feature for the service.

For Twitter as a standalone entity, this is a good thing. Their strength is going to come from the products and services that they clearly own and a move such as this could show that they’re ready to join the likes of LinkedIn and prepare for an IPO, funding or acquisition (though they are themselves denying this).

Twitter growing up?

With the recent report that Twitter is also due to make another acquisition, in the form of Adwords bidding software AdGrok, it seems that Twitter is growing up and has realised that its approach to make everything open without owning much wasn’t going to get the company far as a serious money-making business. But as seems common throughout its history, the innovation from Twitter is coming from other products as opposed to the site itself.

While Twitter has experimented with its own features these have often been met with confusion, such as the direction it took with the retweet button when it launched. This is now evidently also true of the Twitter advertising product. Twitter has been making its own moves here, but the acquisition of AdGrok could see the revenue potential for the site really come into fruition.

It started with Summize

Twitter first showed it was in the acquisition game, when it acquired the search engine Summize (now sitting at search.twitter.com). For those of you that used the site as summize.com regularly will notice that it hasn’t changed much since it was acquired by Twitter. This was an important step in showing how Twitter was going to grow organically as a company, consistently looking for ideas and inspiration from outside of its own boardroom. It recognised that its own search function wasn’t great, that everyone was using summize.com, so they went after them and brought the service in-house. Now the co-founder of Summize has just departed Twitter and the search product has been getting stronger and stronger, with the supposed acquisition of AdGrok showing that this could soon be monetised in a very simple way.

Twitter is also not shy of adding new features onto its site to improve the experience, but oddly these seem far less impressive than the acquisitions it’s making, or the existing features on other sites that it’s imitating. Its recent announcement of the ‘stumble’ feature hasn’t gone down too well, which allows you to see tweets of the profiles a user is following (why is the obvious question that comes to mind):

This feature hasn’t been rolled out yet, but Twitters need to tread carefully with how many features it adds onto the site. Twitter is clearly about to enter a crucial time as it consolidates offerings to consumers by bringing much-needed features in-house while adding new widgets and buttons on top of this could start to interfere with the user experience.

Twitter is showing us a new type of business here – its work was in providing the original service and it might not necessarily be the right ones to improve on this with its own new features. But this doesn’t discredit the company: it has carefully set its own destiny here by opening up the service early on to allow people to innovate and improve, then gradually build up the money to bring these services in-house.

The best products might not come from Twitter, but they are the ones that have positioned it in such a way that these products can develop and grow on their own. A new business model that is ultimately benefitting Twitter in ways we might not have seen coming.

The business of the future

These recent moves by Twitter, and indeed the entire history of the company show that it is very much a company of the future. The service itself shows this, but the way in which it is growing as a company is indicative of a new way of doing business. It has allowed social technologies to influence the way it has developed, never afraid to bring already popular services under its wing, instead of trying to directly compete with them. Its planned photo sharing service will be an important indicator here – whether it acquires an existing service or choose to do this in-house. And though Twitter has certainly been very slow to monetise, it may well just be proving the longer-term business plan that is often lacking at hot new startups from the Valley.

Maybe this was Twitter’s plan all along – instead of going for the quick win of monetising instantly, they played the long game and saw acquisitions as the key to success.