Twitter: Five predictions for 2013

If there was one thing you could say about Twitter's 2012, it was that it wasn't boring. Over the course of the year, the service became bigger than ever, hosted major events like a Q&A with President Obama and another with Pope Benedict XVI, and became an essential tool for those looking for information about everything from Hurricane Sandy to the civil war in Syria.

But 2012 was also contentious for Twitter. The microblogging service put new restrictions on what it would allow third-party developers to do, and then had to deal with a rebellion by those same developers. And it went to war with former ally Instagram over photo-sharing dominance.

Now it's almost 2013, and the slate is wiped clean. Will this be a good year for Twitter? All signs point to yes. The question is, though its fundamentals are strong, can the company successfully manage its growth?

Here are five predictions for Twitter in 2013.

1. Releasing everyone's full tweet histories
This isn't so much a prediction as a near-certainty, as CEO Dick Costolo said multiple times last year that releasing users' full tweet archives was going to happen by the end of 2012, and because the company began slowly rolling out some users' archives before year's end. Best intentions aside, it seems that Twitter's engineers didn't complete the task for all by the end of the year.

Still, when everyone can access all their tweets -- hopefully early in the year -- it will be a big thing for a lot of people. Currently, Twitter gives easy access only to users' last 3,200 tweets. For those with fewer than that, the change is moot. But for power users, having access to their full archives could be a very big deal.

It's not certain how people -- and app developers -- will use users' full tweet archives, but it's clear that contained deep inside that massive database is a wide range of information about people's behavior and sentiments, buying habits, and brand commentary that could be immensely valuable to companies of all kinds. And developers will no doubt be quick to come up with interesting ways to leverage the data. Some may even be interested in leveraging the SEO potential of thousands of keywords' worth of tweets that could be posted on their sites.

Some Twitter observers think the tweet archives will present a valuable tool for tracking someone's entire Twitter history and finding the tweets that best represent those people. Another use could be tracking how someone's Twitter persona changed over time.

And still others think that individuals will find it immensely valuable to finally go back and unlock the thoughts, feelings, and life updates that are currently hidden away beyond the 3,201st tweet in their archive.

2. Out-Instagramming Instagram
One of the major stories at the end of 2012 was the battle between Twitter and former friend Instagram. As Twitter saw its chances to buy Instagram dissipate -- and then watched Facebook acquire the photo-sharing startup -- it also saw a huge amount of revenue potential go out the window, not to mention the ability to harness the passion and commitment of millions of Instagram users.

As a result, Twitter started to roll out a series of new features aimed at replicating some of the Instagram experience. That effort included having relevant photos appear at the top of Twitter search results; making a better, more consistent mobile experience; and, later, releasing its own photo-filtering tools.

But Instagram still has some advantages over Twitter when it comes to photo-sharing and creating and sharing artistic photography, not the least of which is its extremely passionate -- and fast-growing -- community. But Twitter also has a vast user base, which it has the potential to leverage as its tools get better. For one, Twitter could design into its mobile apps a more dedicated photo experience, perhaps even adding a photo tab to the current set of tabs: Home, Connect, Discover, and Me.

Clearly, the service will have to build in new filters, and make it so Twitter users consider photo-sharing a major part of what they choose to use the service for. A startup trying to get into this game would likely get bowled over quickly, but Twitter is a force to be reckoned with. The key question is whether it can work fast enough to catch up to Instagram before it's too late.

3. Becoming more of a financial powerhouse
For years, despite a growing user base, the knock on Twitter was that it was a great service but no one knew how it would make money. Now, as it has ramped up its advertising platform, its critics have quieted down.

Still, Twitter has brought in $1.16 billion in venture capital, according to Crunchbase, and there's no doubt its investors are looking for it to generate even more cash. And soon.

How can it do that? It can do more of what it started doing very well in 2012: getting brands involved, and deeply involved at that, while not turning off users concerned about a treasured service becoming awash in ads.

Among the things it is likely to do are work on easier ways to place ads. Google became a financial powerhouse when it solved that problem, in part with self-service ads, and brands wanting to advertise on Twitter would no doubt like to see an easier experience. As well, it needs to come up with more different ways to make sales.

Fortunately, the company is taking these challenges very seriously, and is putting serious thought into how to take the next step. One advantage it has over Facebook is that it's just as easy for advertisers to place ads on Twitter on mobile devices as it is on the Web. That could bode very well down the line.

4. Mending fences with developers
Twitter had a tough year in 2012 when it came to its relationship with the third-party developer community. After it made decisions restricting the number of users many developers' apps could have, and moved to cut third-party photo-hosting tools out of its mobile apps, things got very sour with a group of people that were instrumental to Twitter's growth.

But one thing Twitter did while it was laying down the law was get specific: It absolutely doesn't want developers working on new Twitter clients, because it wants all the advertising revenue that is coming down the line. It does want them building tools that add value for end-users. When the sting wears off, developers will realize they know the ground rules and can work with them.

What Twitter needs to do from now on is continue to be as transparent and consistent as possible. One reason developers were upset is that they felt caught off guard. If they can plan on what Twitter will do, they can build businesses on that assurance. And clearly, Twitter needs developers to expand the ecosystem, so it's in the company's best interest to restore the working relationship.

Can it? It's impossible to know for sure, but it would make sense to assume that the company knows it needs to be open with developers, and will continue to be so now that it's made its position about what it wants abundantly clear

5. Getting bought by Apple. Or not.
This one is obviously a stretch, but it's not totally out of left field. There have been a number of published reports speculating that the hardware and software giant has invested in Twitter, and might want to acquire the company outright.

There are plenty of reasons it won't happen -- the first being that Twitter has said for some time that it wants to remain an independent company. The company's valuation of around $8.4 billion is another reason. Then again, Twitter has received $1.16 billion in investment, as noted above, and its VCs want a return on their money. Though Twitter has begun making its ad platform work for it, it's hard to imagine that it's anywhere close to making those investors whole.

Apple, of course, has gigantic cash reserves and is probably one of the few companies that could pony up the cash it would take to buy Twitter without breaking (too much) of a sweat. At the same time, Apple has been trying for some time to build a viable social network (remember Ping?) and has failed so far. To be sure, it has a massive database of users' information thanks to iTunes, but that's not the same thing as a social network full of users -- many who love Apple products -- that could be woven into its many services.

Could Twitter be that social network? It could if you imagine Apple carefully integrating it while not disrupting the service as most Twitter users have come to know it. More to the point, Apple buying Twitter would stop either Google or Facebook from doing so, and in the process, taking firm control of the platform wars. And, as Forbes noted in April, Twitter would bring Apple an enormous amount of data it could use to help build and sustain its existing businesses. As well, Twitter could help it drive sign-ups for new services, such as the rumored Apple TV.

Will it happen? Who knows? Many have speculated that Twitter wants an IPO, and that it could go public as soon as 2014. But if an offer of, say, $10 billion was on the table right now, it would be hard to say no.

Update (Friday, 11:56 p.m. PT): This story now better reflects the state of Twitter's plans to release all users' full tweet histories.