Twitter to launch photo hosting service?

While all manner of cool new hardware is shown off in Taipei at Computex 2011, the Silicon Valley rumour mill keeps churning. This week’s choice titbit is that eponymous social network Twitter is due to launch its own photo upload and sharing service imminently, potentially when CEO Dick Costolo takes the stage at the D9 conference on Wednesday.

If Twitter can get it right, the appetite for a new way to share photos on Twitter is certainly there. As we recently saw, Twitpic and its onerous terms and conditions are hardly popular. However, with Twitter’s terms being not hugely dissimilar from Twitpic’s, we can’t see a victory for copyright holders on the horizon just yet.

If the rumours are true, the Twitpics, YFrogs and Lockerz of this world certainly have cause to be worried, as the inclusion of any Twitter-backed service in official mobile clients could spirit away a huge portion of their business.

Twitter recently warned app developers not to “mimic or reproduce the mainstream Twitter consumer client experience.” – however the launch of an official Twitter photo service presents something of a difficult situation for competitors, as in this case it is Twitter moving into their market, not the other way around. What are they to do? Abandon their product and move on,  or try to compete with the Twitter mothership?

The other elephant in the room is how Twitter will monetise the service. Generating revenue has been proving very difficult for Twitter, who recently took on their 500th employees. The service’s current paid offerings – promoted trends and promoted tweets, have seen a backlash from advertisers who claim the campaigns are not targeted enough to generate good returns.

Twitter also has a premium analytics suite waiting in the wings, which will almost certainly be a paid product. However, the road to profitability looks to be a very long one, especially if Twitter insist on developing storage-heavy services such as photo sharing, and have to keep buying up competitors to make sure they’re not squeezed out of their own ecosystem.