Perhaps I'm being overly pessimistic but I see Twitter as this decade's Myspace.
Myspace was generational. A given (mostly teenager) demographic used it through the early to mid part of the last decade. It was, as we all know, supplanted by Facebook. There are many reasons for this, among them that Myspace (IMHO) sat on their laurels and that broader appeal (ie FB's cleaner page design rather than the Flash-swamped monstrosity that was Myspace) ultimately won out.
Twitter was and is touted as a means to:
1. send status updates to your friends (original idea);
2. disseminate news; and
3. follow "celebrities" (broader than the Hollywood notion of celbrities).
In spite of Twitter's stated 175 million accounts [1], how many uses does Twitter REALLY have? [2]. They don't state their 1, 7 and 30 day actives. As another example, Facebook's 750 million users is "monthly actives' [3].
Registered accounts and monthly active users are an important distinction, particularly for Twitter as it appears many people signup, try it out and then "leave". I believe that this problem is far bigger than Twitter has let on.
I simply don't see use (1) taking off. Twitter seems to be a medium for (3). There is definitely a market for that but I think it's a fragile one, easily replaced by something else.
That leaves (2), which is a complicated story. If there's two things podcasters (particularly former journalists, in the traditional sense) like to wax lyrical about it's the death of newspapers and how Twitter is changing the (journalistic) world, both of which are now boring (to me).
Twitter suffers from what I call "bubble thinking", much like Quora does. People in the Valley, in social media, etc think its huge. Normals have, by now, probably heard of it but won't necessarily even know what it is (let alone use the service).
My (unsubstantiated) feeling is that big brands haven't embraced advertising on Twitter. They're simply playing with it. Twitter advertising suffers from the same problems Facebook advertising does: unlike Google, which has the huge benefit of intent (you're searching for something, so Google knows your intent is to find out something about it, a natural fit for advertising), most people view such advertising as noise unrelated to what they're doing.
In Twitter's case it's exacerbated by their 140 character message format and the heavy reliance by users on third-party clients that Twitter doesn't control.
I know it's hip to not worry about how you monetize something in the Valley. While I generally agree with that sentiment, I think Twitter has gotten to the point where it's now a problem.
They recently had an $800 funding round. A profitable company doesn't do that. What I'd be looking at is this: where is that $800 million going? Is it largely paying out early investors? If so, run away. Run as fast as you can (much like Groupon).
Most of the people I know use twitter almost exclusively for use #1. In my friends, we don't want news or celebrity posts taking up our feeds, we use it to chat and share stories. And this group isn't just local, I'm friends with entertainment professionals all over the US, and twitter is the best way to ask for help or to share a hilarious on-site anecdote.
> eMarketer came to the $150 million figure by comparing Twitter with Facebook, which had ad sales of about $150 million in 2007, right after it got serious about selling ads.
So that number is meaningless. Twitter and Facebook advertise totally different, and everyone visits Facebook directly, whereas many get Twitter via 3rd parties.
