Where Topsy Fits Into Apple’s Grand Plans

Yesterday Apple paid more than $200 million for Topsy, a company that analyzes tweets. So, what is it going to do with it?

Robert Galbraith / Reuters / Reuters

Apple suddenly has a lot of interest in distilling Twitter’s massive fire hose of information. It just acquired a company named Topsy that specializes in it for more than $200 million — though what the end result looks like, so far, has stumped much of the tech world.

One leading theory: It would make sense to apply Twitter’s data to television, where it’s most effective. Apple could, effectively, apply Twitter’s proven power to drive conversation around live events to the far larger store of on-demand content.

One of Twitter’s biggest strengths — and a central feature of its advertising business — is its centrality to some live events. The Twitter fire hose is full of data about what people are watching, and how interested they are in that event. The company has also inked several deals of consequence with large television providers to more closely link Twitter to television, further improving Twitter’s view into its users’ watching habits.

At the same time, video on demand and digital video recording set-top boxes are further allowing viewers to watch shows and movies on their own terms. Live event viewership — like the Super Bowl and the Oscars — has held up, but at the same time, on-demand companies like Netflix and Amazon Prime continue to grow.

By using Topsy’s data, Apple could find a new way to serve up shows and movies by determining what’s most popular and trending on Twitter. It can serve up shows and ads based on what a person is interested in, making it more likely that a user would fire up an Apple TV when they want to watch something than a typical set-top box. Siri, too, could theoretically play a role: Imagine an iPhone owner asking Siri, “What shows and movies should I watch right now?”

Apple’s services business is still relatively small compared to its actual product sales, and it’s more like Apple to want to try to sell more devices than monetize its services. For example, iTunes and services brought in $4.3 billion of Apple’s $37.5 billion in revenue for the most recent quarter. But improving the user experience of Apple TV — and making it an obviously better choice over a typical set-top box — would help Apple sell more Apple TVs. (There’s also always the mythical television that is perpetually suspected to be in the works.)

Alternate theories range from distilling interest in apps to improve discovery in the App Store and on iTunes, to better targeting ads on iTunes Radio (which seems unlikely strange for a product sales-driven company like Apple), or to improving Siri by being able to deliver relevant topics to its users. But Apple has another side hobby, the Apple TV, that CEO Tim Cook has said the company is still definitely interested in.

“We do it because we think we can, it will lead us somewhere. And so we’ll see,” he said on an earnings call last year when the company gave an update to the company’s TV set-top box sales.

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