Why are IBM and Twitter joining forces?

Both currently reside in Wall Street's doghouse, so perhaps it's make sense that IBM (IBM) and Twitter (TWTR) are joining forces.

Under their new partnership IBM customers will gain access to Twitter data, and the companies will develop decision-support tools for businesses. The tech services giant and the microblogging service will also develop applications for specific industries such as banking, retail, consumer products and transportation.

Other partnerships have been formed to analyze social media data between technology companies and data analytics firms. But IBM's alliance with Twitter could give Big Blue a leg-up in winning business from companies eager to analyze their social media data so they can, among other things, better target their ads, according to analysts.

"By going directly to Twitter, the social data that the companies are providing becomes more powerful," said Allison Smith, an analyst with Forrester Group.


Clients of the companies will be able to filter Twitter data based on biographical information, geographic location and even emotions expressed in a Tweet. Developers will able to integrate Twitter data into cloud-based applications.

The collaboration comes at a tough time for both companies. IBM chief executive Virginia Rometty earlier this month acknowledged that the company's financial performance is disappointing, telling analysts that IBM must be nimbler in reacting to the fast-changing technology market. Rometty, who succeeded former IBM chief Sam Palmisano in 2012, also hinted about possible layoffs, though she declined to give specifics.

Under Rometty, IBM has continued the company's shift away from low-margin hardware such as servers into more lucrative products and services, such as cloud computing and data analytics. Earlier this year, IBM formed a similar alliance with Apple (AAPL) to offer iPhones and iPads with applications geared toward large enterprises.

As for Twitter, which has about 284 million users, about five times less than (FB), it has come under fire for its slowing user growth. Although Twitter recently reported better-than-expected earnings, investors expected better.

"Twitter needs to be able to show added value," said Rob Enderle of technology research firm Enderle Group, adding that the site "is a real-time measurement of what the public is interested in at any given time. It could be incredibly useful in politics. "

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    Jonathan Berr is an award-winning journalist and podcaster based in New Jersey whose main focus is on business and economic issues.