Apple Goes Social With Its Topsy Buyout

Apple plays its cards close to the vest when it comes to acquisitions, but that doesn't mean investors shouldn't pay attention to Apple's buyout targets.

Apple has been rather active in the last several months on the buyout front, and it recently snatched up another budding tech firm. Yesterday, it was reported that Apple had reached an agreement to buy Twitter data provider Topsy for an estimated $200 million dollars.

Source: Apple

In typical Apple fashion, the tech giant was silent on its plans for their newest start-up toy. However, after looking at Tospy's business, it appears there are several possible ways Apple could use Topsy to improve current, or even future, services.

So given all the hubbub, let's take a look at what investors should know about Apple's latest takeover target.

What Topsy does
Tospy is a data mining company that specializes in monitoring and analyzing user-generated data from Twitter. It enjoys the anointed status as one of four "certified data sellers" of Twitter data. Basically, Topsy's business is to gather, organize, and then resell data from the social networking site.

At first glance this isn't hard to understand, but Topsy and other certified data sellers like it possess sophisticated software that enables them to mine the massive volume of 500 million tweets that are generated daily.

This kind of insight into what the public is saying in real time should be tremendously valuable for Apple as it pushes deeper into various services. And by buying Topsy, unlike its mobile rival Google, Apple has secured its position in the Twittersphere for some time to come.

Of course, this still begs the question...

What will Apple do with Topsy?
Fortunately for Apple, there are plenty of possible tie-ins or enhancements it could make to current, or even future, services by bringing Topsy into the fold.

The most apparent would be possible improvements to Apple's recently launched iTunes Radio. Using Topsy's real-time analytics, Apple could possibly search for trending songs that its algorithms might otherwise overlook. It's widely believed that online radio rival Pandora's music recognition chops remains far ahead of Apple's thanks to its decade-plus head start. Incorporating information from Topsy could potentially help level the playing field between the competing services and allow Apple to eat into Pandora's impressive leading share of online radio in the U.S.

Tospy's real-time insights could also help Apple strengthen another area of recent emphasis - mapping. Apple Maps has come a long way since its botched arrival last year, but still trails Google in areas such as traffic data. By tapping into real time chatter, Apple could potentially use Topsy to integrate relevant traffic data for Apple Maps users as they go about their daily commutes. It's also possible that Apple could tap Topsy window into the Twitter world to provide more relevant recommendations for common destinations like restaurants as well.

Apple could also use Topsy to improve recommendations for potential app downloads in its Apple store as well. Again, the principle is the same as the two scenarios outlined above. Apple would use its insight into the public dialogue to get a better sense of exactly what a user might want or what's trending at the moment.

A smarter, more insightful Apple
Again much of this is speculation. Per its usual stance on its recent purchases, Apple refused to comment on exactly what its plans were for Topsy. And as we've seen above, there are any number of potential improvements or tweaks Apple could make to improve its various services now that it owns Topsy.

One thing is clear though, that Apple having a greater understanding of what the general public is saying and why should help strengthen any number of its products. And as Apple and Google fight tooth and nail for dominance in the booming mobile space, one thing is abundantly clear -- buying Topsy certainly strengthens Apple's hand, if ever so slightly. And for that, Apple investors should certainly be thankful.

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The article Apple Goes Social With Its Topsy Buyout originally appeared on Fool.com.

Fool contributor Andrew Tonner owns shares of Apple. Follow Andrew and all his writing on Twitter at @AndrewTonner. The Motley Fool recommends Apple, Google, and Pandora Media. The Motley Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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