On the company’s blog today, Twitter announced that they would be ceasing all SMS updates in the UK. As usual, TechCrunch UK was hot off the mark with a report, and I’m sure that plenty of other opinions will fly around the Web over the next few days.
Quite frankly though, I’m amazed that the service has lasted this long. Twitter appears to lack a viable business model, and each time you update your status it could be sending that out, via SMS, to tens, hundreds or even thousands of recipients. Even if Twitter received a small amount for each incoming SMS, this would be dwarfed by the number of outgoing messages. The more popular Twitter gets, the more they will lose. The sensible option would be to charge users for receiving texts—which is fairly simple to do—but it looks like the site is run by a bunch of techies who have been blinded into thinking that providing a service which costs money to run without a long-term source of revenue is somehow a good idea. Then again, they’re running a Web 2.0 site, where having basic accountancy skills on your CV will ensure that you never get hired.
From a personal perspective, I’m actually quite pleased to see this happening. Over the past couple of years, I’ve seen companies pour millions of dollars into these web 2.0 companies, which have produced virtually no returns and are an appalling waste of capital which could be put to far better use elsewhere. Perhaps now investors will look again at opportunities to “invest” in companies like Twitter, Facebook et al and see them for what they really are—a highly speculative bet on the success of a company with no assets, no business model and virtually no revenue.