CNBC’s Greenburg,’s Del Conte Suggest Twitter's 'Fail Whale' Could Be Its End as a Viable Business

July 2nd, 2010 3:25 PM

The Twitter "Fail Whale": An irritating part of anyone's day that regularly uses social networking in their day-to-day activities. But could this endanger the viability of Twitter as long-term business?

A couple of analysts say think so. Both senior editor Natali Del Conte and Herb Greenburg of CNBC Business News suggested Twitter's infrastructure problems could pose issues for Twitter's survival on CNBC's July 2 "Power Lunch."

"Twitter's down all the time," Greenburg said. "I love using Twitter. I will say it here and now - if Twitter were a business, it would be broke. Wait! Twitter is a business, but it's a private business. Maybe it's the type of business that should go public in this environment because those are the kind of companies that go public.

Greenburg referenced to claims that Google was a monopoly and pointed out Twitter is in a similar position since Twitter's spotty service affects all users, who have no other alternative.

"To tie this together, remember, Google had the Buzz which didn't do much," Greenburg said. "Twitter you can argue is a monopoly in this space. But it's a monopoly that is constantly out and we have to put up with it. And somebody at some point should make a point about this because we're all users."

But Del Conte explained the problem with the Twitter is that its business model doesn't allow for it to invest in infrastructure since there hasn't been an established way for the service to make enough money to do so.

"They just don't have the Google dollars," Del Conte said. "Google has this big huge infrastructure. They have servers and things to prevent this from happening. And Twitter is still just relatively new. It's in its infancy. Things like World Cup really pushed Twitter down because people are just flooding the service."

CNBC "Power Lunch" co-host Michelle Caruso Cabrera made the point that Twitter would seem like a candidate for investment - a product with huge demand. However, it has some management issues.

"If I'm an investor, I look at that and say, ‘Wow, this is a product with huge demand, but it's not being managed well,'" Caruso Cabrera said.

But Del Conte warned that if Twitter didn't figure out how to overcome these issues and begin to invest in its service, the social networking giant might not continue to stay in business.

"[T]hey've been coming out with small ideas for how they're going to monetize with tweets inside your stream that are advertising," Del Conte said. "And a lot of people are like, ‘No, don't want anything to do with that.' But I think that we've become very tolerant of targeted advertising and that would be fine. We'll see that in the next couple of years as Twitter continues to expand. I'm not worried that they won't figure out how to make money. I'm worried they won't figure out how to continue to stay in business."