A Crucial Time for Twitter: An Update on Changes
Why the big rush?
On June 11, Dick Costolo, Twitter’s (TWTR) CEO (chief executive officer), announced he will be stepping down next month from the company’s highest position. The question in a lot of people’s minds is why the big rush? Why didn’t Costolo wait for the end of the year so he could turn things around?
According to Costolo, succession talks were initiated last year, and the decision was finalized in a meeting with the board in early June. He plans to serve on the board and help with the transition process.
Twitter under Costolo’s leadership
In his five-year tenure, Costolo turned Twitter into a public company with a market value of around $25 billion. He did address certain serious problematic areas such as the new user retention with features like Instant Timeline and While You Were Away that highlights the best tweets since a user’s last login. However, these initiatives proved sluggish in terms of user growth.
In spite of slow product innovations, Twitter’s monthly user base will grow 14.1% this year. That’s down from a 30% growth two years ago. By 2019, Twitter’s worldwide user growth rate will be 6%, according to eMarketer and as you can see in the above graph.
Twitter’s monthly active users (or MAU) as of 1Q15 is 308 million, which is far less than Facebook’s (FB) MAU base of 1.44 billion. In the last few quarters, Twitter has faced a number of issues that have caused its user base growth to slow down. Twitter implemented an authentication measure in 3Q14 that prevented its users from logging on with the BlackBerry (BBRY) app (application).
In 4Q14, Twitter said it lost about 1 million users due to the rollout of Apple’s (AAPL) iOS 8 smartphone operating system. Users either forgot their passwords or never bothered to redownload the Twitter app.
However, in 1Q15, Twitter started adding SMS (Short Message Service) followers to its user base. SMS followers are users who have chosen to get tweets via SMS. These are users who don’t have an Internet connection on their phones. They are typically users who use feature phones in emerging markets (EEM).
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