Apple-Topsy Deal: What Is It Good For?

12/4/13 10:37AM EST

Apple Topsy Deal What Is It Good For Apple Topsy Deal: What Is It Good For?

Image via Flickr/ Brandon Carson

Apple Inc. (NASDAQ:AAPL) has been unusually busy in the acquisition sphere in recent weeks. After the company acquired motion sensor maker Prime Sense few people doubted that the technology would be used on a new Apple television. Apple, however, stayed quiet about the purchase. Now Apple has bought a more confusing company, and nobody is sure what the Cupertino company is up to.

Topsy Labs is a social media start up that specializes in Twitter analysis. Apple bought the company for a reported $200 million.  That’s a direction that Apple Inc. (NASDAQ:AAPL) hasn’t been looking in in years. The company created a couple of limited entries into the social networking industry, but eventually decided to stick to hardware. That may be changing.

Apple Topsy Acquisition

Apple Inc. (NASDAQ:AAPL) is probably not going to get involved in social networking. The company prefers to get into a market before it has developed. Social networking is already saturated. There are embedded players who would be incredibly difficult to move, and Apple would have to develop an entirely new business model to deal with becoming an advertising firm.

On top of those issues, the segregation that Apple pushes with its platform means that an Apple social network could be exclusionary, and it might fail as a result. Apple has never seemed all that interested in social networking, but the company can see the usefulness of the software. Apple cares about information. It can use information to improve its offerings across the board.

Topsy Labs will be used to analyze Twitter in order to improve Apple software and services. Those software and services improvements will likely drive sales of Apple hardware. That’s what investors want to see from the company. There are a few products in particular that Apple needs to improve. Twitter analysis could go a long way toward boosting the functionality of some of the company’s headline applications.

Apple Needs Help From Topsy

The most obvious use for Topsy is still advertising. Apple Inc. (NASDAQ:AAPL) may not have an ad empire like Google Inc (NASDAQ:GOOG), but the company still engages in a limited amount of advertising. iTunes recommends specific television shows and music all of the time. If the program has a clear idea of what a user is up to on Twitter it will be able to direct them to more suitable content and increase those numbers for Apple.

A second use for Topsy data may be on the way in the form of real substantial Apple advertising. The use of a fingerprint to log in to the iPhone 5s, along with the higher average earnings of iPhone users, gives Apple a huge amount of information on users. Topsy may be used to organize that information, and Apple may seek to sell access to its users in the years ahead.

There are a huge range of options for Apple Inc. (NASDAQ:AAPL) with Topsy. The company is deep and strong, and it has a large amount of ways in which it can monetize its users. Topsy will fit in, no matter what Apple uses it for.

Disclosure: Author represents that he has no position in any stocks mentioned in this article at the time this article was submitted.